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In: Finance
River Enterprises has $500 million in debt and 1818 million shares of equity outstanding. Its excess...
River Enterprises has $500 million in debt and 1818 million shares of equity outstanding. Its excess cash reserves are $16 million. They are expected to generate $206 million in free cash flows next year with a growth rate of 22% per year in perpetuity. River Enterprises' cost of equity capital is 12%. After analyzing the company, you believe that the growth rate should be 33% instead of 22%. How much higher (in dollars) would the price per share be if you are right?
Solutions
jeff jeffy answered 9 months agoRelated Solutions
Natsam Corporation has $250 million of excess cash. The firm has no debt and 500 million...
Natsam Corporation has $250 million of excess cash. The firm has
no debt and 500 million shares outstanding, with a current market
price of $15 per share. Natsam’s board has decided to pay out this
cash as a one-time dividend
. a. What is the ex-dividend price of a share in a perfect
capital market?
b. If the board instead decided to use the cash to do a one-time
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1. PQR Inc. has a debt-equity ratio of 2 and one million shares outstanding. The firm’s...
1.
PQR Inc. has a debt-equity ratio of 2 and one million shares
outstanding. The firm’s pro-forma Statement of Comprehensive Income
for the next year indicates that its net income will be $650,000.
If the company proposes to invest 60% of its earnings in projects,
what is the dividend per share?
Select one:
a. $0.34
b. $0.43
c. $0.52
d. $0.90
e. $1.20
2.
In terms of changes in the number of shares outstanding, a 25%
stock dividend is equivalent...
PQR Inc. has a debt-equity ratio of 2 and one million shares outstanding. The firm’s pro-forma...
PQR Inc. has a debt-equity ratio of 2 and one million shares
outstanding. The firm’s pro-forma Statement of Comprehensive Income
for the next year indicates that its net income will be $650,000.
If the company proposes to invest 60% of its earnings in projects,
what is the dividend per share?
Select one:
a. $0.34
b. $0.43
c. $0.52
d. $0.90
e. $1.20
Sora Industries has 63 million outstanding shares, $ 130 million in debt, $ 56 million in...
Sora Industries has 63 million outstanding shares, $ 130 million
in debt, $ 56 million in cash, and the following projected free
cash flow for the next four years LOADING... : a. Suppose Sora's
revenue and free cash flow are expected to grow at a 4.9 % rate
beyond year 4. If Sora's weighted average cost of capital is 10.0 %
, what is the value of Sora's stock based on this information? b.
Sora's cost of goods sold was...
Sora Industries has 60 million outstanding shares, $ 120 million in debt, $ 40 million in...
Sora Industries has
60 million outstanding shares,
$ 120 million in debt,
$ 40 million in cash, and the following projected free cash
flow for the next four years:
Year
0
1
2
3
4
Earnings and FCF Forecast ($ million)
1
Sales
433.0
468.0
516.0
547.0
574.3
2
Growth vs. Prior Year
8.1%
10.3%
6.0%
5.0%
3
Cost of Goods Sold
(313.6)
(345.7)
(366.5)
(384.8)
4
Gross Profit
154.4
170.3
180.5
189.5
5
Selling, General, & Admin.
(93.6)
(103.2)...
Sora Industries has 60 million outstanding shares, $ 120 million in debt, $ 40 million in...
Sora Industries has 60 million outstanding shares, $ 120
million in debt, $ 40 million in cash, and the following
projected free cash flow for the next four years.
Year
0
1
2
3
4
Earning
& FCF Forecast ($millions)
1
Sales
433
468
516
547
574.3
2
Growth vs. Prior Year
8.1%
10.3%
6.0%
5.0%
3
Cost of
Goods Sold
(313.6)
(345.7)
(366.5)
(384.8)
4
Gross
Profit
154.4
170.3
180.5
189.5
5
Selling,
General & Admin.
(93.6)
(103.2)...
A company has 5.56 million common shares outstanding and $65 million of debt with an interest...
A company has 5.56 million common shares outstanding and $65
million of debt with an interest rate of 5.8%. The company wants to
raise another $52 million. It can do so by selling an additional
2.78 million shares of common stock (the equity plan) or by taking
out a bank loan with an interest rate of 7.1% (the debt plan). The
company has no preferred stock. The corporate tax rate is 21%. At
what level of EBIT would the company...
54. A company has 7.01 million common shares outstanding and $56 million of debt with an...
54. A company has 7.01 million common shares outstanding and $56
million of debt with an interest rate of 5.4%. The company wants to
raise another $44.8 million. It can do so by selling an additional
3.505 million shares of common stock (the equity plan) or by taking
out a bank loan with an interest rate of 6.4% (the debt plan). The
company has no preferred stock. The corporate tax rate is 28%. At
what level of EBIT would the...
Company A has a market value of equity of $2,000 million and 80 million shares outstanding....
Company A has a market value of equity of $2,000 million and 80
million shares outstanding. Company B has a market value of equity
of $400 million and 25 million shares outstanding. Company A
announces at the beginning of 2019 that is going to acquire Company
B.
The projected pre-tax gains in operating income (in millions of
$) from the merger are:
2019
2020
2021
2022
2023
Pre-tax Gains in Operating Income
12
16
28
38
45
The projected pre-tax...
Company A has a market value of equity of $2,000 million and 80 million shares outstanding....
Company A has a market value of equity of $2,000 million and 80
million shares outstanding. Company B has a market value of equity
of $400 million and 25 million shares outstanding. Company A
announces at the beginning of 2019 that is going to acquire Company
B.
The projected pre-tax gains in operating income (in millions of
$) from the merger are:
2019
2020
2021
2022
2023
Pre-tax Gains in Operating Income
12
16
28
38
45
The projected pre-tax...
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