Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

NYU Inc. has 5000 semi-annual bonds selling at $955 each. The coupon rate is 3%. The maturity is 25 years. The firm has a 2

NYU Inc. has 5000 semi-annual bonds selling at $955 each. The coupon rate is 3%. The maturity is 25 years. The firm has a 2 million shares of common stock outstanding with a beta of 1.1. The U.S. T-bill is yielding 4%. The market risk premium is 8%. The tax rate is 20 percent. The target debt-to-equity ratio is .25. The current EBIT is $25 million. Depreciation is $5 million. The change in net working capital is $5 million. Net capital spending is $10 million. NYU Inc also has $8 million cash. If the predicted growth rate in cash flow is 3% indefinitely. What is the stock price?

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

Inside Company Valuation

Authors: Angelo Corelli

1st Edition

3319537822, 9783319537825

More Books

Students also viewed these Finance questions