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I have been stuck on this impossible question for am hour. I followed all the steps in the example the same way and it was
I have been stuck on this impossible question for am hour. I followed all the steps in the example the same way and it was still wrong. Can somebody help to solve this please n thanks. ROUND TO THE NEAREST CENT please
Kohwe Corporation plans to finance a new investment with leverage. Kohwe Corporation plans to borrow $49.3 million to finance the new investment. The firm will pay interest only on this loan each year, and it will maintain an outstanding balance of $49.3 million on the loan. After making the investment, Kohwe expects to earn free cash flows of $10.7 million each year. However, due to reduced sales and other financial distress costs, Kohwe's expected free cash flows will decline to $9.7 million per year. Kohwe currently has 4.6 million shares outstanding, and it has no other assets or opportunities. Assume that the appropriate discount rate for Kohwe's future free cash flows is 7.9% and Kohwe's corporate tax rate is 40%. What is Kohwe's share price today given the financial distress costs of leverage? The price per share is $ per share. (Round to the nearest cent.)Step by Step Solution
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