Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Roybus, Inc., a manufacturer of flash memory, just reported that its main production facility in Taiwan was destroyed in a fire. Although the plant was

image text in transcribed
Roybus, Inc., a manufacturer of flash memory, just reported that its main production facility in Taiwan was destroyed in a fire. Although the plant was fully insured, the loss of production will decrease Roybus's free cash fow by $176 million at the end of this year and by $60 milion at the end of next year. a Roybus has 36 million shares outstanding and a weighted average cost of capital of 126%, what change in Royous's stock price would you expect upon this announcement? (Assume that the value of Roybus's debt is not affected by the event) b. Would you expect to be able to sell Roybus stock on hearing this announcement and make a profit? Explain. .. Roybus has 36 milion shares outstanding and a weighted average cost of capital of 120%, what change in Roybus's stock price would you expect upon this announcement (Assume that the value of Roybu's debt is not affected by the event.) The change in price per share would be 50. Round to the nearest cont.)

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

Entrepreneurial Finance And Accounting For High-Tech Companies

Authors: Frank J Fabozzi

1st Edition

0262336901, 9780262336901

More Books

Students also viewed these Finance questions