What is estimate of brandtly price per share

Assignment Help Financial Management

Reference no: EM131995987

Brandtly Industries invests a large sum of money in R&D; as a result, it retains and reinvests all of its earnings. In other words, Brandtly 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 Brandtly's stock. The pension fund manager has estimated Brandtly's free cash flows for the next 4 years as follows: $3 million, $7 million, $11 million, and $15 million. After the fourth year, free cash flow is projected to grow at a constant 6%. Brandtly's WACC is 15%, the market value of its debt and preferred stock totals $50 million; and it has 21 million shares of common stock outstanding.

Write out your answers completely. For example, 13 million should be entered as 13,000,000.

a. What is the present value of the free cash flows projected during the next 4 years? Round your answer to the nearest cent. Do not round your intermediate calculations.

b. What is the firm's horizon, or continuing, value? Round your answer to the nearest cent.

c. What is the firm's total value today? Round your answer to the nearest cent. Do not round your intermediate calculations.

d. What is an estimate of Brandtly's price per share? Round your answer to the nearest cent. Do not round your intermediate calculations.

Reference no: EM131995987

Questions Cloud

Write the species that fit the description : Write the species that fit the following description? Write the symbol of a period 3 element that forms a +1 cation write the symbol of an ion from group

Why did ebay need a big data solution : Why did eBay need a Big Data solution? What were the challenges, the proposed solution, and the obtained results?

Define why organization have information deficiency problem : Discuss the relationship between data, information, and knowledge. Support your discussion with at least 3 academically reviewed articles.

Copper half-reaction using the nernst equation : How do i find the actual value of E for the copper half-reaction using the Nernst Equation? I know that the temperature is 25ºC and the Eº

What is estimate of brandtly price per share : What is the present value of the free cash flows projected during the next 4 years? What is an estimate of Brandtly's price per share?

Corporate valuation model approach : Using the corporate valuation model approach, what should be the company's stock price today?

What volume will this gas occupy at stp after drying : What volume will this gas occupy at STP after drying. The vapor pressure of water at 20°C is 18.0 torr.

When the yield curve is downward-sloping : When the yield curve is downward-sloping. What is the required rate of return?

How would you go about interviewing each employee : How would you go about interviewing each employee? In other words, discuss all parameters of the four interviews.

User Account

All Pages