Shares of equity outstanding

Assignment Help Financial Management
Reference no: EM131879248

River Enterprises has $500 million in debt and 20 million shares of equity outstanding. Its excess cash reserves are $15 million. They are expected to generate $200 million in free cash flows next year with a growth rate of 2% per year in perpetuity. River Enterprises’ cost of equity capital is 12% per year in perpetuity. After analyzing the company, you believe that the growth rate should be 3% instead of 2%. How much higher (in dollars) would the price per share of stock be if you are right?

Reference no: EM131879248

Questions Cloud

What is phylogeny : What is phylogeny? Wondering for Bio 182. Missed lecture day that covered this topic.
Describe a real world example : 1. Knowing that acid rain has a pH of 2 - 3 would crop species with a narrow soil pH range be in trouble?
What did you learn from the given videos : What did you learn from these videos? What are your thoughts? Support your answers through the use of peer reviewed scholarly sources from MedLine and Ebsco.
What stock price is expected one year from now : Holtzman Clothiers's stock currently sells for $15 a share. What is the required rate of return? What stock price is expected 1 year from now?
Shares of equity outstanding : River Enterprises has $500 million in debt and 20 million shares of equity outstanding.
Create the closure plan : Create the report in 800 words in a Microsoft Word document; Cite any sources you use using correct APA format on a separate page
Result of receiving a vaccination : Debate whether mass inoculation is worth the risk of the few who die each year as a result of receiving a vaccination.
Advantage to heterozygotes in areas where malaria : What autosomal recessive disorder can provide a survival advantage to heterozygotes in areas where malaria is present? How does this work?
Saving for the college education of your two children : You are saving for the college education of your two children. How much money do you need to have in your account when your oldest enters college?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the comparable salary today-inflation rate

Suppose you have insurance agent offers you a policy that will provide you with a yearly income of $50,000 in 30 years. What is the comparable salary today, assuming an inflation rate of 6%? Show all work.

  What is the project year zero net cash flow

Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.49 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life. If the tax rate is 34 percent..

  How much money have you accumulated for your retirement

You have accumulated some money for your retirement. You are going to withdraw $74286 every year at the beginning of the year for the next 24 years starting from today. How much money have you accumulated for your retirement? Your account pays you 10..

  Equipment to produce cash flows

Kingston, Inc. management is considering purchasing a new machine at a cost of $4,129,832. They expect this equipment to produce cash flows of $821,407, $841,261, $853,835, $1,065,425, $1,134,239, and $1,296,663 over the next six years. If the approp..

  How much would you pay for share of the company today

You require a return of 12% to invest in GDL. How much would you pay for a share of the company today?

  Planning trip to europe when you graduate from college

You are a freshman in college and are planning a trip to Europe when you graduate from college at the end of four years. You plan to save the following amounts annually, starting today: $704, $707, $711, and $672. If the account pays 6.40 percent ann..

  What is the return on assets and return on equity

Keller Cosmetics maintains an operating profit margin of 8.45% and a sales-to-assets ratio of 3.80. It has assets of $590,000 and equity of $390,000. Interest payments are $39,000 and the tax rate is 40%. What is the return on assets? What is the ret..

  Mortgage options

what is the most you are willing to pay in points for the 5.75% mortgage? Assume a $100,000 mortgage.

  What compound rate is necessary for the money to double

If $1 is invested for 10 years, what compound rate is necessary for the money to double?

  What is the effective annual cost of trade credit

Your supplier offers terms of 1.7?/12?, Net 45. What is the effective annual cost of trade credit if you choose to forgo the discount and pay on day 45??

  What is effective annual rate for higher yielding security

What is the effective annual rate (EAR) for the higher yielding security?

  Firm fund investment opportunity with issue of junior debt

Wolverine Software has just completed an R&D project that required borrowing senior debt from a bank. The bank has been promised a repayment of $140 million. Could the firm fund the investment opportunity with an equity issue? Could the firm fund the..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd