Question
Company A is fairly profitability. It has cash operating revenue of $1,500 per year and cash operating costs of $600. It has determined that it
Company A is fairly profitability. It has cash operating revenue of $1,500 per year and cash operating costs of $600. It has determined that it can keep the cash operating revenues and cash operating costs at that level for 10 years and then the cash flows cease. It is an all equity firm with 150 shares outstanding. The appropriate discount rate is 12%. The company has an investment opportunity with a Present Value of $2,500 and will require a cash outflow of $1,200 today. What is the value of this firm today and what is the price per share?
steps please.
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