Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are given the following information for Huntington Power Company. Assume the company's tax rate is 15 percent. The firm has sales in the

image text in transcribed

You are given the following information for Huntington Power Company. Assume the company's tax rate is 15 percent. The firm has sales in the most recent year of $800M, and EBIT of $300M. The firm also had capital expenditures of $120M and depreciation expense of $90M. The required level of working capital is 8% of sales. The firm expects growth of 10% per year over the next 4 years, after which the growth rate will drop to 3% per year forever Debt 2000,000 6.1 percent coupon bonds outstanding, $1,000 par value, 15 years to maturity, selling for 90 percent of par; the bonds make semiannual payments. The firm has common stock of 100 MM shares outstanding trading at $15 The risk free rate is 3.5% and the expected market return is 10.5%. The Beta of the stock is 1.3 What is the company's WACC? What is the Intrinsic Value of the Stock? If the Corp tomorrow makes a public tender offer at $ 20 / share? As a minority investor what would be your decision & why?

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

Financial statements

Authors: Stephen Barrad

5th Edition

978-007802531, 9780324186383, 032418638X

More Books

Students also viewed these Finance questions

Question

Write the first four terms of the sequence {a}=1- n n=1.

Answered: 1 week ago

Question

At which conferences do students regularly present?

Answered: 1 week ago

Question

DC hecto 1 OU 2 Dit O O Our 27 a DC hecto 1 OU 2 Dit O O Our 27 a

Answered: 1 week ago