What is the intrinsic stock price after the repurchase

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Question - Bayani Bakery's most recent FCF was $48 million; the FCF is expected to grow at a constant rate of 6%. The firm's WACC is 11% and it has 15 million shares of common stock outstanding. The firm has $30 million in short-term investments, which it plans to liquidate and distribute to common shareholders via a stock repurchase; the firm has no other non-operating assets. It has $366 million in debt and $60 million in preferred stock.

Required -

a) What is the value of operations?

b) Immediately prior to the repurchase, what is the intrinsic value of equity?

c) Immediately prior to the repurchase, what is the intrinsic stock price?

d) How many shares will be repurchased, assuming the use of all short-term investments?

e) What is the intrinsic stock price after the repurchase?

Reference no: EM132479769

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