The firm has no preferred stock on its balance sheet

Assignment Help Financial Management
Reference no: EM131859672

Assume today is December 31, 2013. Barrington Industries expects that its 2014 after-tax operating income [EBIT(1 – T)] will be $430 million and its 2014 depreciation expense will be $70 million. Barrington's 2014 gross capital expenditures are expected to be $110 million and the change in its net operating working capital for 2014 will be $20 million. The firm's free cash flow is expected to grow at a constant rate of 6.5% annually. Assume that its free cash flow occurs at the end of each year. The firm's weighted average cost of capital is 8.8%; the market value of the company's debt is $2.2 billion; and the company has 170 million shares of common stock outstanding. The firm has no preferred stock on its balance sheet and has no plans to use it for future capital budgeting projects. Using the corporate valuation model, what should be the company's stock price today (December 31, 2013)? Round your answer to the nearest cent.

Reference no: EM131859672

Questions Cloud

What is the npv of this project-should bobo replace crimper : Bobo Manufacturing's crimping machine was purchased 5 years ago for $65,000. What is the NPV of this project? Should Bobo replace the crimper?
What is annual equivalent cost : You plan to operate the same type of machine for 8 years. Your MARR is 16.2%?. What is the Annual Equivalent Cost?
Find the monthly payment and estimate the remaining balance : Find the monthly payment and estimate the remaining balance. Assume interest is on the unpaid balance.
What is the value of the stock price today : There are 18 million shares outstanding. What is the value of the stock price today (Year 0)?
The firm has no preferred stock on its balance sheet : The firm has no preferred stock on its balance sheet and has no plans to use it for future capital budgeting projects.
Effective annual rate of interest : How much will be available for retirement at age 65 if the fund earns a 5% effective annual rate of interest?
Calculate annual operating cash flows : Calculate the depreciable base for the asset. Calculate Annual operating cash flows for year 1-5 (OCF) Calculate the project’s internal rate of return (IRR)
What is required return for the overall stock market : EXPECTED AND REQUIRED RATES OF RETURN Assume that the risk-free rate is 3.5% and market risk premium is 4%. What is required return for the overall stock market
What will the waccs be for each division : Suppose your firm has decided to use a divisional WACC approach to analyze projects. What will the WACCs be for each division?

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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