What is the value of operations

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Dougie's Donuts most recent free cash flow (FCF) was $105 million; the FCF is expected to grow at a constant rate of 3%. The ?rm's WACC is 1522%, and it has 15 million shares of common stock outstanding. The ?rm has $75 million in short-term investments, which it plans to liquidate and distribute to common shareholders via a stock repurchase; the ?rm has no other non-operating assets. It has 1345 million in debt and $40 million in preferred stock.

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? How many shares will remain after the repurchase?

e. Immediately after the repurchase, what is the intrinsic value of equity? The intrinsic stock price?

Reference no: EM132403068

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