Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

River Enterprises has $ 4 9 8 4 9 8 million in debt and 1 8 1 8 million shares of equity outstanding. Its excess

River Enterprises has $498498 million in debt and 1818 million shares of equity outstanding. Its excess cash reserves are $ 17$17 million. They are expected to generate $198198 million in free cash flows next year with a growth rate of 22% per year in perpetuity. River Enterprises' weighted average cost of capital is 1111%. After analyzing the company, you believe that the growth rate should be 33% instead of 22%. How much higher(in dollars) would the price per share be if you are right?
Question content area bottom
Part 1
If the growth rate is 22%, the price per share is $enter your response here. (Round to the nearest cent.)'

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

Step: 3

blur-text-image

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

Your Financial Future How To Take Control Of Your Financial Future

Authors: Deloris Lutke

1st Edition

979-8388730831

More Books

Students also viewed these Finance questions

Question

25.0 m C B A 52.0 m 65.0 m

Answered: 1 week ago

Question

How effective was the school improvement plan?

Answered: 1 week ago

Question

Data points include: surveys, discipline, demographics

Answered: 1 week ago

Question

What environmental factors influenced achievement?

Answered: 1 week ago