Question

Bayani Bakery's most recent FCF was $49 million; the FCF is expected to grow at a constant rate of 6%. The firm's WACC is 10% and it has 15 million shares of common stock outstanding. The firm has $30 million in short-term investments, which it plans to liquidate and distribute to common shareholders via a stock repurchase; the firm has no other nonoperating assets. It has $362 million in debt and $61 million in preferred stock.

What is the value of operations? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places.
$   million

Immediately prior to the repurchase, what is the intrinsic value of equity? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places.
$   million

Immediately prior to the repurchase, what is the intrinsic stock price? Round your answer to the nearest cent.
$   per share

How many shares will be repurchased? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places.
   million shares

How many shares will remain after the repurchase? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places.
   million shares

Immediately after the repurchase, what is the intrinsic value of equity? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places.
$   million

The intrinsic stock price? Round your answer to two decimal places.
$   per share

Answer 1

Current FCF	49.0000
Rate of return	10.00%
Growth Rate	6.00%
PV of free cash flows	=Current Dividend*(1+Growth rate)/(Rate of return-Growth Rate)
	=49*(1+0.06)/(0.10-0.06)
PV of free cash flows	1,298.50
Value of operating cash flow	1,298.50
Non operating investment	30.00
Firm Value	1,328.50
Debt	362.00
Preferred Stock	61.00
Value of equity	905.50
no of shares	15.00
Share price=	60.37
Shares repurchase	=30/60.37	0.50
Remaining shares	14.50
Revised intrinsic value of equity
Value of operating cash flow	1,298.50
Firm Value	1,298.50
Debt	362.00
Preferred Stock	61.00
Value of equity	875.50
no of shares	14.50
Share price=	60.37