Lance Inc.'s free cash flow was just $3.00 million. If the expected long-run growth rate for this company is 8%, weighted average cost of capital is 16%, Lance has $6 million in short-term investments and $4.44 million in de 1 million shares outstanding, what is the intrinsic stock price? $21.03 $19.57 $42.06 $27.70 $31.56
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- IBM expects to pay a dividend of $2 next year and expects these dividends to grow at 8% a year. The price of IBM is $80 per share. What is IBM's cost of equity capital? ..... A. 9.45% B. 9.98% C. 10.5% D. 8.4%Lance Inc's free cash flow was just $2.00 million. If the expected long-run growth rate for this company is 60%, if the weighted average cost of capital is 15.0%, Lance has $4 million in short- term investments and $4 million in debt, and 1 million shares outstanding, what is the intrinsic stock price?IBM just paid a dividend of $4.0 and expects these dividends to grow at 8% a year. The price of IBM is $95 per share. What is IBM's cost of equity capital? O A. 8% O B. 12.55% O C. 11.92% O D. 3.76%
- ACME, Inc. forecasts that it will have the free cash flows shown below. The free cash flows are expected to grow by 4% per year after year 3. Year 1 23 FCF (S million) 20 48 54 The weighted average cost of capital is 11%. The firm has $40 million of debt and 10 million shares outstanding. What is a good estimate of ACME's share price? O $55.25 $27.30 $60.70 $38.55You expect KT industries (KTI) will have earnings per share of $3 this year and expect that they will pay out $2.50 of these earnings to shareholders in the form of a dividend. KTI's return on new investments is 16% and their equity cost of capital is 12%. The value of a share of KTI's stock is closest to: A. $10.72 B. $16.07 C. $32.15 D. $26.79The most recent free cash flows of a firm were $15 million. They are expected to grow at a constant rate of 5% forever. The firm has $60 million in debt, $6 million in preferred stock, and $10 million in marketable securities WACC is 10%. The firm has 10 million shares of stock outstanding. What would the market price per share for this firm be? A $23.90 B $27.10 C. $24.90 D.$26.10
- Sora Industries has 62 million outstanding shares, $124 million in debt, $47 million in cash, and the following projected free cash flow for the next four years: a. Suppose Sora's revenue and free cash flow are expected to grow at a 3.6% rate beyond year four. If Sora's weighted average cost of capital is 14.0%, what is the value of Sora stock based on this information? b. Sora's cost of goods sold was assumed to be 67% of sales. If its cost of goods sold is actually 70% of sales, how would the estimate of the stock's value change? c. Return to the assumptions of part (a) and suppose Sora can maintain its cost of goods sold at 67% of sales. However, the firm reduces its selling, general, and administrative expenses from 20% of sales to 16% of sales. What stock price would you estimate now? (Assume no other expenses, except taxes, are affected.) d. Sora's net working capital needs were estimated to be 18% of sales (their current level in year zero). If Sora can reduce this requirement…Suppose Watch-Over-Ya Corp's projected free cash flow for next year is FCF1 = $500,000 and FCF is expected to grow at a constant rate of 5.0% per year indefinitely. Watch-Over-Ya has no debt or preferred stock, and its weighted average cost of capital (WACC) is 8.2%. It has 200,000 shares outstanding, What is the value of its operation?An analyst is trying to estimate the intrinsic value of Blue Co. that has a weighted average cost of capital at 10%. The estimated free cash flows for the company for the following years are: Year 1 P3,000 Year 2 P4,000 Year 3 P5,000 The analyst estimates that after three years, free cash flow will grow at a constant annual percentage of 6%. What is the total intrinsic value of the company's common stock if combined debt and preferred stock has a P25,000 market value? *
- Suppose Microsoft Co. will pay a dividend of $1.9 per share one year from now (year 1), and $3.8 per share two years from now (year 2). After then (in other words, after the second year) dividends will grow at 3% per year forever. If the firm's equity cost of capital is 5%, what is their current price per share? $182.76 $5.26 O $174.31 $195.70An analyst is trying to estimate the intrinsic value of VN Co. that has a weighted average cost of capital at 10%. The estimated free cash flows for the company for the following years are: · Year 1 P3,000 · Year 2 P4,000 · Year 3 P5,000 The analyst estimates that after three years, free cash flow will grow at a constant annual percentage of 6%. What is the total intrinsic value of the company’s common stock if combined debt and preferred stock has a P25,000 market value? A. 98,556 B. 109,339 C. 78,310 D. 84,339Majong Inc. forecasts that it will have the free cash flows shown below. The free cash flows are expected to grow by 5% per year after year 3. Year 1 2 3 CF (S million) - 20 48 54 The weighted average cost of capital is 13%. The firm has $55 million of debt and 10 million shares outstanding. What is the firm value today (in $ million)? What is a good estimate of Majong's value per share?