Watkins inc has never paid a dividend and when it might

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Watkins Inc. has never paid a dividend, and when it might begin paying dividends is unknown. Its current free cash flow is $100,000, and this FCF is expected to grow at a constant 7 percent rate. The weighted average cost of capital is WACC=11%. Watkins currently holds $325,000 of nonoperating marketable securities. Its long-term debt is $1,000,000, but it has never issued preferred stock.

a. Calculate Watkins' value of operations.

b. Calculate the company's total value.

c. Calculate the value of its common equity.

Reference no: EM13483316

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