Question
Assume Peter Luger [PLG] stock sells for $77.31 and bonds $908.22. Its stock dividend last year was $1.61 each quarter, and its bonds coupon is
Assume Peter Luger [PLG] stock sells for $77.31 and bonds $908.22. Its stock dividend last year was $1.61 each quarter, and its bonds coupon is 6.88%. PLGs beta is 1.43, its bonds have 10-year maturity, and tax rate is 30.05%. Todays risk-free rate is 1.17%, historical risk-free rate is 4.25%, and market risk premium 4.30%. PLG has 16,425 bonds and 303,608 shares of stock. Further, its operating cash flow in 2020 was $12,152,094 and is expected to grow by 7.15% in 2021 and 2022, 5.70% in 2023 and 2024, and 4.45% in 2025 and 2026 before reaching its long-term growth rate (for any input) of 2.95%. What is the present values of PLGs OCFs and the PV of its terminal value?
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