What is your estimate of a share price

Reference no: EM133325724

Question: Suppose a firm's operating cash flows is estimated to be $10 million, its fixed capital investment is at $2.5 million, and its investment in net working capital is currently at $1.0 million.

Its long-term debt is $100 million in total and the most recent debt issuance had the YTM of 4.5%. Its stock is currently trading at $50 a share with 2 million shares outstanding. Its beta is estimated to be 1.2; risk-free rate is 2% with the equity market premium of 5%.

The firm faces 30% tax rate.

(1) What is the value of the firm if you assume the firm's free cash flows will grow at 3% indefinitely?

(2) What is your estimate of a share price?

Reference no: EM133325724

Questions Cloud

Analyze trend of the working capital of the company marico : Analyze the trend of the working capital of the company Marico over the past three years. (b) What are the areas where the firm has improved, and which areas

How does the network-episode model incorporate : How does the network-episode model incorporate the following four components: the illness career, the social support system, the treatment system.

Define the career awareness, career readiness : Define in your words the following: Career Awareness, Career Readiness, Career Planning. How will you promote each in your Computer Science Essentials course?

What are some of the changes that have taken place : What are some of the changes that have taken place by lending institutions in assessing the customer procedures and the criteria for approving a loan

What is your estimate of a share price : What is the value of the firm if you assume the firm's free cash flows will grow at 3% indefinitely and What is your estimate of a share price

How might intervene with specific ssw activities : Detailed examples of how you, as an SSW, might intervene with specific SSW activities / roles that are part of the SSW Standards of Practice with your client(s)

Implement k-means clustering and k-nn classification : Implement K-Means Clustering and K-NN Classification Algorithms Implement K-Means algorithm by generating 5 different arrays which include 20 random numbers

Case study including challenges in the environment : Case study including challenges (global trade is more difficult for small business than large) in the environment (back, country, finance sector) explained

What may be some risks or drawbacks : After reading the opinion above, what is your response? What may be some risks or drawbacks? Please be detailed in your opinion

User Account

All Pages