User Account

All Pages

What is the firm horizon or continuing and value

Assignment Help Financial Management
Reference no: EM132006062

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: $4 million, $6 million, $8 million, and $16 million. After the fourth year, free cash flow is projected to grow at a constant 8%. Brandtly's WACC is 16%, the market value of its debt and preferred stock totals $50 million; and it has 9 million shares of common stock outstanding.

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

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. $

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

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

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: EM132006062

Questions Cloud

What must the coupon rate be on these bonds : The bonds make semiannual payments and have a par value of $1,000. What must the coupon rate be on these bonds?
Decline in returns on financial investments : There is a decline in returns on financial investments other than bonds. Other things being equal, this will cause:
Assuming market is in equilibrium : Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years?
Computation of future values and present values : Computation of Future Values and Present Values. What is the present value of six receipts of $1,000 each received at the beginning of each period,
What is the firm horizon or continuing and value : What is the firm's horizon, or continuing, value? What is an estimate of Brandtly's price per share?
Rapidly and currently needs to retain all of its earnings : Computech Corporation is expanding rapidly and currently needs to retain all of its earnings. what is the value of the stock today?
Using the corporate valuation model approach : Using the corporate valuation model approach, what should be the company's stock price today?
What is the value of maxwell mining stock : If D0 = $5 and rs = 15%, what is the value of Maxwell Mining's stock?
What is the total cash flow in year eight of project : What is the Total Cash Flow in Year 8 of the project if the equipment can be sold for $4,571 and the tax rate is 36%?

Reviews

Write a Review

Financial Management Questions & Answers

  Calculate the standard deviation of returns

Calculate the standard deviation of returns over the? 4-year period for each of the three alternatives.

  Calculate the NPV of ambulance if required rate of return

Central Mass Ambulance Service can purchase a new ambulance for $200,000 that will provide an annual net cash flow of $50,000 per year for five years. The salvage value of the ambulance will be $25,000. Assume the ambulance is sold at the end of year..

  Investing in large-company common stock

Determine the probability that in any given year you will lose money by investing in large-company common stock.

  What is the horizon value

Capsim Corporation is undergoing a restructuring, and its free cash flows are expected to be unstable during the next few years. However, FCF is expected to be $50 million in Year 5, i.e., FCF at t = 5 equals $50 million, and the FCF growth rate is e..

  Use three step binomial tree to value six month put option

Use a three-step binomial tree to value a six-month put option on the index with a strike price of 300 if it is (a) European and (b) American?

  Assume that the contract value had not increased

Sophia purchased a variable annuity contract with $50,000 purchase payment. Surrender charges begin with 7 percent in the first year and decline by 2 percent each year. In addition, Sophia can withdraw 10 percent of her contract value each year witho..

  Computing interest tax savings

(Computing interest tax savings) Dharma Supply has earnings before interest and taxes (EBIT) of $556,000, interest expenses of $322,000 and faces a corporate tax rate of 36 percent. What is Dharma Supply's net income? What are the firm's interest tax..

  About firm weighed average cost of capital

Which of the following statement about a firm’s weighed average cost of capital (WACC) is incorrect

  What is companys net income

Company has total assets of $35.594 billion, total debt of $9.678 billion, and net sales of $23.670 billion. Their net profit margin for the year was 0.20, while the operating profit margin was 30 percent. What is Company's net income? (Answer needs ..

  What is the minimal amount you should bid per park

You are working on a bid to build two city parks a year for the next three years. What is the minimal amount you should bid per park?

  What is Holts WACC

The companys marginal tax rate is 40%. The stockholders required rate of return is estimated to be 10%. What is Holts WACC?

  Determine the expected rate of return on equity capital

Determine the expected rate of return on equity capital under each of the working capital policies.- Which working capital policy is riskier? Explain.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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