Question

​Covan, Inc. is expected to have the following free cash​ flow: Year 1 2 3 4...

​Covan, Inc. is expected to have the following free cash​ flow: Year 1 2 3 4 times times times FCF 12 14 15 16 Grow by 5 % per year a. Covan has 6 million shares​ outstanding, ​$4 million in excess​ cash, and it has no debt. If its cost of capital is 11 %​, what should be its stock​ price? b. Covan adds its FCF to​ cash, and has no plans to add debt. If you plan to sell Covan at the beginning of year​ 2, what is its expected​ price? c. Assume you bought Covan stock at the beginning of year 1. What is your expected return from holding Covan stock until year​ 2?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
​Covan, Inc. is expected to have the following free cash​ flow: Year 1 2 3 4...
​Covan, Inc. is expected to have the following free cash​ flow: Year 1 2 3 4 times••• FCF 12 14 15 16 Grow by 4%per year a. Covan has 88 million shares​ outstanding, $22 million in excess​ cash, and it has no debt. If its cost of capital is 13% what should be its stock​ price? b. Covan adds its FCF to​ cash, and has no plans to add debt. If you plan to sell Covan at the beginning of...
​Covan, Inc. is expected to have the following free cash​ flow: (Year) 1 2 3 4...
​Covan, Inc. is expected to have the following free cash​ flow: (Year) 1 2 3 4 (FCF)12 14 15 16 Grow by 4 % per year a. Covan has 7 million shares​ outstanding, ​$4 million in excess​ cash, and it has no debt. If its cost of capital is 13 %​, what should be its stock​ price? b. Covan adds its FCF to​ cash, and has no plans to add debt. If you plan to sell Covan at the beginning...
​Covan, Inc. is expected to have the following free cash​ flow: Year 1 2 3 4...
​Covan, Inc. is expected to have the following free cash​ flow: Year 1 2 3 4 ••• FCF 11 13 14 15 Grow by 3% per year a. Covan has 8 million shares​ outstanding, $4 million in excess​ cash, and it has no debt. If its cost of capital is 13%​, what should be its stock​ price? b. Covan adds its FCF to​ cash, and has no plans to add debt. If you plan to sell Covan at the beginning...
Year 1 2 3 4 times times times••• FCF 1313 1515 1616 1717 Grow by 5...
Year 1 2 3 4 times times times••• FCF 1313 1515 1616 1717 Grow by 5 %5% per year a. Covan has 88 million shares? outstanding, $22 million in excess? cash, and it has no debt. If its cost of capital is 12 %12% , what should be its stock? price? b. Covan reinvests all its FCF and has no plans to add debt or change its cash holdings? (it does not invest its cash? holdings). If you plan to...
TRX Corporation is expected to generate free cash flows (FCF) of $6.7 million in year 1,...
TRX Corporation is expected to generate free cash flows (FCF) of $6.7 million in year 1, $9.99 million in year 2, $12.06 million in year 3, and $14.81 million in year 4. After then, the FCF will grow by 3% per year. TRX has 10 million shares outstanding, $4 million in excess cash, and it has $1 million in debt. If its cost of capital is 6%, the stock price would be $________? Input your answer without the $ sign...
Portage Bay Enterprises has $ 4 million in excess​ cash, no​ debt, and is expected to...
Portage Bay Enterprises has $ 4 million in excess​ cash, no​ debt, and is expected to have free cash flow of $ 13 million next year. Its FCF is then expected to grow at a rate of 2 % per year forever. If Portage​ Bay's equity cost of capital is 10 % and it has 4 million shares​ outstanding, what should be the price of Portage Bay​ stock?
Portage Bay Enterprises has $ 4 million in excess​ cash, no​ debt, and is expected to...
Portage Bay Enterprises has $ 4 million in excess​ cash, no​ debt, and is expected to have free cash flow of $ 9 million next year. Its FCF is then expected to grow at a rate of 4 % per year forever. If Portage​ Bay's equity cost of capital is  13% and it has 4 million shares​ outstanding, what should be the price of Portage Bay​ stock? a. The price of Portage​ Bay's stock is ​$_____ per share. 
1. 123 Warehousing is expected to generate a free cash flow (FCF) of $5,730.00 million this...
1. 123 Warehousing is expected to generate a free cash flow (FCF) of $5,730.00 million this year (FCF₁ = $5,730.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If 123 Warehousing’s weighted average cost of capital...
Praxis Corp. is expected to generate a free cash flow (FCF) of $7,890.00 million this year...
Praxis Corp. is expected to generate a free cash flow (FCF) of $7,890.00 million this year ( FCF1 = $7,890.00 million), and the FCF is expected to grow at a rate of 20.20% over the following two years ( FCF2 and FCF3 ). After the third year, however, the FCF is expected to grow at a constant rate of 2.46% per year, which will last forever ( FCF4 ). If Praxis Corp.’s weighted average cost of capital (WACC) is 7.38%,...
Extensive Enterprise Inc. is expected to generate a free cash flow (FCF) of $2,450.00 million this...
Extensive Enterprise Inc. is expected to generate a free cash flow (FCF) of $2,450.00 million this year (FCF₁ = $2,450.00 million), and the FCF is expected to grow at a rate of 21.40% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 2.82% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Extensive Enterprise Inc.’s weighted average cost of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT