What is the firms value of operations in millions

Assignment Help Financial Management

Reference no: EM13870592

Kinkead Inc. forecasts that its free cash flow in the coming year, i.e., at t = 1, will be -$10 million, but its FCF at t = 2 will be $20 million. After Year 2, FCF is expected to grow at a constant rate of 4% forever. If the weighted average cost of capital is 14%, what is the firm's value of operations, in millions?

Reference no: EM13870592

Questions Cloud

What is the target stock price in five years : In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the “terminal” stock price using a benchmark PE ratio. Suppose a company just paid a dividend of $1...

What is the target share price in seven years : Davis, Inc., currently has an EPS of $2.16 and an earnings growth rate of 7 percent. The benchmark PE ratio is 20. What is the target share price in 7 years?

What is the rate of inflation : The nominal rate of return on the bonds of Stu's Boats is 9.25 percent. The real rate of return is 3.9 percent. What is the rate of inflation?

Natural gas futures to hedge its costs of power production : Chevron is considering the use of natural gas futures to hedge its costs of power production. Which of the following methods is Chevron most likely to use to deem this hedge highly effective?

What is the firms value of operations in millions : Kinkead Inc. forecasts that its free cash flow in the coming year, i.e., at t = 1, will be -$10 million, but its FCF at t = 2 will be $20 million. After Year 2, FCF is expected to grow at a constant rate of 4% forever. If the weighted average cost of..

Soybean futures price changes and cost of goods sold : The accountants of Coca-Cola just determined using the regression method that soybean futures barely qualify for hedging its exposure to variations in cost of goods sold( R-squared = 0.81). What can you conclude about the correlation between soybean ..

The next year the common stock of gold corp : The next year the common stock of Gold Corp will pay a dividend of 2.10 per share. If the company is growing at a rate of 4.03 percent per year and your required rate of return is 15% what is gold’s company stock worth to you? Golden Rod Corp’s prefe..

Stock price according to the constant growth dividend model : Marco Chip, Inc just issued zero-coupon bonds with a par value of $1000. The bond has a maturity of 14 years and a yield to maturity 0f 6.96%, compound semi-annually. What is the current price of the bond? The last dividend of Delta, Inc was $2.69, t..

You intend to hedge a floating rate payment : You intend to hedge a floating rate payment on a $50 Million notional with a reset date of 3/18/2015 and payment date of 6/20/2015. The interest rate of the payment will equal 3 month LIBOR as of 3/18/2015. You short 50 EDH5 contracts at 99.25. What ..

User Account

All Pages