Buchner Corporation is planning to grow their business with…
Buchner Corporation is planning to grow their business with a large investment in the coming year. The estimated free cash flows for the next 2 years are as follows: FCF1 = -$40 million FCF2 = $8 million After year time 2 it is estimated that the free cash flow will grow at a stable 6% growth rate. The WACC for Buchner is 11% and cost of equity is 13%. All of Buchner’s assets are operating assets. In addition, Buchner has debt outstanding of $45 million. What is the value of Buchner’s operations (Vop) with the planned investment?
Read DetailsThe last dividend paid by a company (D0)was $2. The dividend…
The last dividend paid by a company (D0)was $2. The dividend growth rate is expected to be constant at 3% for 2 years, after which dividends are expected to grow at a rate of 8.5% forever. The firm’s required return (rs) is 11.0%. What is the best estimate of the current stock price?
Read DetailsA company’s value of operations is $270 million, based on th…
A company’s value of operations is $270 million, based on the free cash flow valuation model. The best estimate of current market values of its balance sheet accounts is: $21 million in accounts receivable, $15 million in inventory, $9 million in short-term investments that are unrelated to operations, $6 million in accounts payable, $33 million in notes payable, $27 million in long-term debt, $6 million in preferred stock, and $42 million in retained earnings. If the company has 2 million shares of stock outstanding, what is the best estimate of the stock’s price per share?
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