Question

In: Finance

Bruin Inc. will have earnings of $15 million next year and is projected to grow at...

Bruin Inc. will have earnings of $15 million next year and is projected to grow at a constant rate of 6 percent forever. All earnings are paid out as dividends to shareholders.

The company plans to launch a new project three years from now that will cost $10 million. The project will increase the firm's annual earnings by a constant $8.3 million every year forever starting one year later (i.e. 4 years from now).

What is the market value of the company stock? The discount rate is 10.6 percent.

Select one:

a. $192 million

b. $394 million

c. $138 million

d. $377 million

e. $50 million

Solutions

Expert Solution

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

Bruin Inc. will have earnings of $15 million next year and is projected to grow at...
Bruin Inc. will have earnings of $15 million next year and is projected to grow at a constant rate of 6 percent forever. All earnings are paid out as dividends to shareholders. The company plans to launch a new project three years from now that will cost $10 million. The project will increase the firm's annual earnings by a constant $8.3 million every year forever starting one year later (i.e. 4 years from now). What is the market value of...
Bruin Inc. will have earnings of $15 million next year and is projected to grow at...
Bruin Inc. will have earnings of $15 million next year and is projected to grow at a constant rate of 6 percent forever. All earnings are paid out as dividends to shareholders. The company plans to launch a new project three years from now that will cost $10 million. The project will increase the firm's annual earnings by a constant $8.3 million every year forever starting one year later (i.e. 4 years from now). What is the market value of...
Bruin Inc. will have earnings of $15 million next year and is projected to grow at...
Bruin Inc. will have earnings of $15 million next year and is projected to grow at a constant rate of 6 percent forever. All earnings are paid out as dividends to shareholders. The company plans to launch a new project three years from now that will cost $10 million. The project will increase the firm's annual earnings by a constant $8.3 million every year forever starting one year later (i.e. 4 years from now). What is the market value of...
Burklin, Inc., has earnings of $18.5 million and is projected to grow at a constant rate...
Burklin, Inc., has earnings of $18.5 million and is projected to grow at a constant rate of 5 percent forever because of the benefits gained from the learning curve. Currently, all earnings are paid out as dividends. The company plans to launch a new project two years from now that would be completely internally funded and require 25 percent of the earnings that year. The project would start generating revenues one year after the launch of the project and the...
Bruin Inc. has recently announced a $2.2 EPS. Earnings are expected to grow at 5 percent...
Bruin Inc. has recently announced a $2.2 EPS. Earnings are expected to grow at 5 percent per year forever. The company will not pay dividends on the stock over the next 6 years. However, it will pay 30% of its earnings as dividend starting in year 7. The payout ratio will remain at 30% forever. Earnings will continue to grow at the same 5% rate. If the required rate of return on this stock is 15 percent, what is the...
A company is projected to have a free cash flow of $346 million next year, growing...
A company is projected to have a free cash flow of $346 million next year, growing at a 6% rate until the end of year 3. After that, cash flows are expected to grow at a stable rate of 2.3% in perpetuity. The company's cost of capital is 9.4%. The company owes $92 million to lenders and has $16 million in cash. If it has 196 million shares outstanding, what is your estimate for its stock price? Round to one...
A company is projected to have a free cash flow of $429 million next year, growing...
A company is projected to have a free cash flow of $429 million next year, growing at a 4.7% rate until the end of year 3. After that, cash flows are expected to grow at a stable rate of 2.6%. The company's cost of capital is 10.8%. The company owes $114 million to lenders and has $10 million in cash. If it has 264 million shares outstanding, what is your estimate for its stock price? Round to one decimal place.
company is projected to have a free cash flow of $314 million next year, growing at...
company is projected to have a free cash flow of $314 million next year, growing at a 4.9% rate until the end of year 3. After that, cash flows are expected to grow at a stable rate of 2.3%. The company's cost of capital is 10.6%. The company owes $107 million to lenders and has $11 million in cash. If it has 257 million shares outstanding, what is your estimate for its stock price? Round to one decimal place.
A company is projected to have a free cash flow of $357 million next year, growing...
A company is projected to have a free cash flow of $357 million next year, growing at a 4.4% rate until the end of year 3. After that, cash flows are expected to grow at a stable rate of 2.4%. The company's cost of capital is 9.3%. The company owes $129 million to lenders and has $8 million in cash. If it has 279 million shares outstanding, what is your estimate for its stock price? Round to one decimal place.
A company is projected to have a free cash flow of $389 million next year, growing...
A company is projected to have a free cash flow of $389 million next year, growing at a 5% rate until the end of year 3. After that, cash flows are expected to grow at a stable rate of 2.5% in perpetuity. The company's cost of capital is 8.3%. The company owes $106 million to lenders and has $7 million in cash. If it has 239 million shares outstanding, what is your estimate for its stock price? Round to one...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT