What is the price of an rjr share

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Analysts expect RJR Nabisco to generate free cash flow of $1.12 billion at the end of 1988. Assume that cash flows occur on December 31 and today is January 1, 1988. Analysts expect RJR's cash flow to grow at 6% in perpetuity. RJR has a capital structure policy of maintaining its debt at 21.05% its value and it is committed to maintaining that ratio in perpetuity. The required return of shareholders is 13.8% and the required return of lenders is 10%. The tax rate is 40%. There are 250.612 million shares outstanding. Use this information to answer the following questions.

What is the price of an RJR share? Round your answer to the nearest cent.

Reference no: EM133114573

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