Question
You are planning to value Watson Inc. and you have the following information: The company has 1.852 million shares outstanding. The market value of its
You are planning to value Watson Inc. and you have the following information:
The company has 1.852 million shares outstanding.
The market value of its debt is $3.192 billion.
FCFF is currently $1.1559 billion
Beta is 0.90, the risk premium is 5.5%, and the risk-free rate is 5.5%.
The before-tax cost of debt is 7%.
The tax rate is 40%.
The company has a capital structure of 25% debt and 75% equity.
The FCFF growth rate is 4% and is expected to remain constant.
What is the WACC? Answer as a percent to two decimal places.
What is the value of the firm? Enter as dollars to three decimal places.
What is the total market value of equity? Enter as dollars to three decimal places.
What is the value per share? Enter as dollars to two decimal places.
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