Question
Your company is considering to buy ABC Inc. ABC's current cash flow from assets (CFFA) is $4 Million. It expects to grow at 10% every
Your company is considering to buy ABC Inc. ABC's current cash flow from assets (CFFA) is $4 Million. It expects to grow at 10% every year from year 1 to year 4; after year 4, it expects CFFA will grow at 5% forever. Currently, ABC Inc. has $ 20 M debt, and has 2 million shares of stock outstanding. Corporate tax rate is 35%. The discount rate for your company and ABC Inc is 18% and 13% , respectively.
What is the cash flow from asset in year 5 in million dollars?
What is ABC's Terminal value at year 4 in million dollars?.
. What is ABC's firm value in million dollars??
. What is ABC's stock price per share ?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started