What should be the price per share

Assignment Help Financial Management
Reference no: EM132059807

You are working on the valuation for an upcoming IPO. The company that wants to sell its stock expects the following future free cash flows (FCF, in millions of dollars): -2 in year 1, 6 in year 2, 20 in year 3, and cash flows are expected to grow steadily at 6.0% after year 3.

The discount rate for this company is 11.8%, and it plans to sell 11 million shares.

What should be the price per share? Enter your answer in terms of dollars, rounded to cents (maximum of 2 decimals), and without the dollar ($) sign. If your answer is $25.43 (25 dollars and 43 cents), then enter 25.43

Reference no: EM132059807

Questions Cloud

Prepare the journal entry to record the replenishment : On March 20, Dody's petty cash fund of $105 is replenished, Prepare the journal entry to record the replenishment of the petty cash fund
Find the relative extrema and points of inflection : Find the relative extrema and points of inflection
How much will be this balloon payment : You have $50,000 in cash that you can put down on the house, but you need to borrow the rest of the purchase price.
Find the position vector of a particle : Find the position vector of a particle whose acceleration vector is a = (6t, 2) with an initial velocity vector (0, 0) and initial position vector (3, 0).
What should be the price per share : You are working on the valuation for an upcoming IPO. The company that wants to sell its stock expects the following future free cash flows .
Explain yield to maturity and yield to call : How would you explain yield to maturity (YTM) and yield to call (YTC) to a friend with no background in finance?
Find the intervals of concave up : a) Find the critical values. b) Find the intervals of increasing / decreasing and classify the extrema. c) Find the intervals of concave up / down
Estimate the weighted average cost of capital for wmd : Discuss and justify your chosen discount rate. If the discount rate you use in your DCF analysis differs from the WACC estimated.
Calculate the probability of the stated outcome : Calculate the probability of the stated outcome. Check your answer using technology. (Round your answer to four decimal places.)

Reviews

Write a Review

Financial Management Questions & Answers

  Broad market-focused differentiation

You may need to grab your STADM book for this one. Narrow market, focused differentiation. Broad market, focused differentiation

  Considering a project with an initial cost

The Dry Dock is considering a project with an initial cost of $118,400. The project’s cash inflows for years 1 through 3 are $37,200, $54,600, and $46,900, respectively. What is the IRR of this project?

  Compute the expected one-year interest rates in third year

The interest rate on one-year treasury bonds is 1.0 percent, the rate on two-year bonds is 0.9 percent, and the rate on three year T-bonds is 0.8 percent.

  The yield-to-maturity and realized yield-to-maturity

What is the difference between the yield-to-maturity, the realized yield-to-maturity, and the yield-to-call? And which is always the highest?

  Mortgages require annual year-end level amortization payment

Both mortgages require annual year-end level amortization payments. Find the amount of interest in the 5th payment of the new mortgage.

  Used mortgage arrangement with bank

Meals for the Homeless borrowed $5,650 to buy kitchen equipment.It used a mortgage arrangement with a bank,

  Capital gains yield-share based on a market rate of return

The Toy Chest pays an annual dividend of $4.80 per share and sells for $93.20 a share based on a market rate of return of 15 percent. What is the capital gains yield?

  Consider the cash flows

Consider the following cash flows: Year Cash Flow 0 –$ 34,000 1 15,100 2 16,600 3 12,500 Howell Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Year Cash Flow 0 –$37,500,000 1 56,500,000 2 –12,500,000

  Accrual accounting and cash basis accounting

Identify the differences between accrual accounting and cash basis accounting. How is the profit margin calculated? Discuss its use in analyzing a company's performance. What is the purpose of closing entries? Describe the closing process

  The key direct regulator of the financial advisory industry

Which of the following regulator is the key direct regulator of the financial advisory industry?

  Dividends are anticipated to maintain a growth rate

The next dividend payment by Halestorm, Inc., will be $2.12 per share. The dividends are anticipated to maintain a growth rate of 8 percent forever. If the stock currently sells for $43 per share, what is the required return?

  How much is usnet transaction exposure

USNet, Inc., an American networking equipment firm, How much is USNet’s transaction exposure?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd