What is vandell intrinsic value of operations

Reference no: EM131979044

Question: Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a target capital structure consisting of 30% debt; its beta is 1.50 (given its target capital structure). Vandell has $10.13 million in debt that trades at par and pays an 7.6% interest rate. Vandell's free cash flow (FCF0) is $1 million per year and is expected to grow at a constant rate of 6% a year. Vandell pays a 40% combined federal and state tax rate. The risk-free rate of interest is 4% and the market risk premium is 5%. Hastings' first step is to estimate the current intrinsic value of Vandell.

What are Vandell's cost of equity and weighted average cost of capital? Round your answer to two decimal places. Do not round intermediate calculations. Cost of equity: % WACC: %

What is Vandell's intrinsic value of operations? (Hint: Use the free cash flow corporate valuation model.) Round your answer to two decimal places. Do not round intermediate calculations.

What is the current intrinsic value of Vandell's stock? Round your answer to the nearest cent. Do not round intermediate calculations.

Reference no: EM131979044

Questions Cloud

Critically analyse the effectiveness of companies act : Undertake a critical evaluation of the clarity provided by the courts in lifting the veil of incorporation - critically analyse the effectiveness

Why pharmaceutical companies want to make an artificial : Case Study: Medical Marijuanna. Why might pharmaceutical companies want to make an artificial, oral form of THC available

What is the value of the annual incentive fee : What is the value of the annual incentive fee according to the Black-Scholes formula? (Do not round intermediate calculations).

Find total amount of interest paid over the loan term : Heather wants to buy a Dodge Viper that she found online. The dealer has offered her the following two options for financing.

What is vandell intrinsic value of operations : Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a target capital structure consisting.

Find resulting percentage change in earnings per share : Haunted Forest, Inc.is selling fog machines. Use the following information about Haunted Forest, Inc. to answer the following questions.

What should happen to the price of suburban : What should happen to the price of suburban, stand-alone retail real estate when supply and demand for this type of real estate are unchanged.

Formulating a SWOT analysis of the Coca-Cola Company : For the Case, we will be formulating a SWOT analysis of the Coca-Cola Company. erform an assessment of Coca-Cola's external environment

What happens to the expected portfolio return : What happens to the expected portfolio return if the portfolio beta increases from 1.0 to 1.5, the risk-free rate decreases from 5 to 4%.

User Account

All Pages