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can you please solve this question as fast as you can I need it urgently 5. A company has the following cash flows. As well
can you please solve this question as fast as you can I need it urgently
5. A company has the following cash flows. As well in its capital structure it has, 3,500 preferred shares trading at par and 6,500 common shares. Its bonds yield 6% in the market. It's preferred shares yield 8%. New common equity can be issued at 12% and its WACC is 10%. Ending cash flows are expected to grow at "infinity" at the same rate as the previous year. Question 1: What is the value of the company's share price? And the market value of debt is $350,000. Stock analysts at the Royal Bank and TD bank have a buy rating on the stock and they believe that the shares are worth $12.00? Question 2: Should you buy the stock? Question 3: what is the Profitability Index of this stream of cash flows? And should you proceed? The after tax cashflows are noted below: 3 4 5 2 Year 0 1 -$25,000 $53,000 FCF $10,000 $55,000 $0 -$150,000Step by Step Solution
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