Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

According to the value based management model, what is the stock price per share given the following data? Year 1 Revenue 725.00 Fixed costs 90.00

According to the value based management model, what is the stock price per share given the following data?

Year

1

Revenue

725.00

Fixed costs

90.00

Variable costs

280.00

Additional investment in NWC

3.00

Additional investment in operating long-term assets

80.00

Depreciation

75.00

Tax rate

0.40

The free cash flow is expected to grow at 8% from year 1 to year 5 and 6% after year 5 to infinity.

WACCcomp = 20%.

Market value of the firm:

Price per share

Number of shares

Market value

Long-term debt

700.00

Preferred stock

7.00

10

70.00

Common stock, equity

15.00

100

1,500.00

Total

2,270.00

Market value of non-operating short-term assets=50

Market value of non-operating long-term assets=80

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Business The Challenges Of Globalization

Authors: John J. Wild, Kenneth L. Wild

9th Edition

0134729226, 978-0134729220

More Books

Students also viewed these Finance questions

Question

Find the ABCD parameters for the circuit shown. 1

Answered: 1 week ago

Question

How does the endocrine system interact with the circulatory system?

Answered: 1 week ago