What is an estimate of price per share

Assignment Help Financial Management

Reference no: EM131998241

Gunco Industries invests a large sum of money in R&D; as a result, it retains and reinvests all of it earnings. In other words, Gunco does not pay any dividends and it has no plans to pay dividends in the near future. A major pension fund is interested in purchasing Gunco’s stock. The pension fund manager has estimated Gunco’s FCF for the next 4 years as follows: $4 million, $5 million, $11 million, and $14 million. After the forth year, FCF is projected to grow at a constant 5%. Gunco’s WACC is 10%, the market value of its debt and preferred stock totals $55 million, and it has 100 million shares of common stock outstanding. What is an estimate of Gunco’s price per share? You must show your work (your calculator inputs and math) to receive full credit.

Reference no: EM131998241

Questions Cloud

Invest in equity and use homemade leverage : Mary can still invest in XYZ’s equity and use homemade leverage (or unleveraged) to achieve the same cash flow as in (i).

What was wrong with their alternatives : Andrew Fastow, as an alternative over- sight measure, endure that he kept the company out of trouble. What was wrong with their alternatives?

What is the history of smart cards : What is the history of smart cards - Which industries have utilized smart card technology successfully - Explain how smart cards can reduce fraud

Which reduces the risk of dramatic rate swings : Which reduces the risk of dramatic rate swings when borrowing at prevailing interest rates?

What is an estimate of price per share : What is an estimate of Gunco’s price per share?

High tax brackets tend to invest in municipal bonds : Do investors in high tax brackets tend to invest in municipal bonds? Why or why not?

Type of bias or heuristic is professor french falling victim : Which type of bias or heuristic is Professor French falling victim too? Explain briefly.

About to impose new tax on security transactions : Africa is about to impose a new tax on security transactions, which will results in lower liquidity.

Accrued interest due to seller from buyer at settlement : Calculate the accrued interest due to the seller from the buyer at settlement. Calculate the clean price of the bond.

User Account

All Pages