Question

The present value of JECK​ Co.'s expected free cash flow is $100 million. If JECK has...

The present value of JECK​ Co.'s expected free cash flow is $100 million. If JECK has $30 million in​ debt, $5 million in​ cash, and 2.8 million shares​ outstanding, what is its share​ price?

The​ company's share price is ​$__.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Sol:

Expected free cash flow (Enterprise value) = $100 million

Debt = $30 million

Cash = $5 million

Outstanding shares =2.8 million

Market capitalization = Outstanding shares x Share price

To determine share price as follows:

Enterprise value = (Outstanding shares x Share price) + Market value of debt - Cash and Equivalent

$100 million = (2.8 million x Share price) + $30 million - $5 million

$100 million = (2.8 million x Share price) + $25 million

$100 million - $25 million = (2.8 million x Share price)

$75 million = (2.8 million x Share price)

Share price = $75 million / 2.8 million = $26.79

Therefore company's share price is $26.79

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
the present value of all the expected future free cash flow of your firm is $320...
the present value of all the expected future free cash flow of your firm is $320 million. the firm has $170 million of debt, and a cash balance of $30 million. If there are 13 million shares outstanding, what is the price of each share of this firm? a) $40.00 b) $9.85 c) $9.25 e) $13.85
Beishan Technologies' end-of-year free cash flow (FCF1) is expected to be $70 million, and free cash...
Beishan Technologies' end-of-year free cash flow (FCF1) is expected to be $70 million, and free cash flow is expected to grow at a constant growth rate of 5% a year in the future. The firm's WACC is 10%, and it has $600 million of long-term debt and preferred stock. If the firm has 34 million shares of common stock outstanding, what is the estimated intrinsic value per share of their common stock? Your answer should be between 14.20 and 68.54
Long Island Power and Light's free cash flow next year will be $100 million and it...
Long Island Power and Light's free cash flow next year will be $100 million and it is widely expected to grow at a 5 percent annual rate indefinitely. The company's weighted average cost of capital is 10 percent, the market value of its liabilities is $1 billion, and it has 20 million shares outstanding.                                                                                     a. Estimate the price per share of Long Island’s common stock.                                                                             b. A private equity firm believes that by selling the company’s...
1.Smith and T Co. is expected to generate a free cash flow (FCF) of $5,500.00 million...
1.Smith and T Co. is expected to generate a free cash flow (FCF) of $5,500.00 million this year (FCF₁ = $5,500.00 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). Assume the firm has no nonoperating assets. If Smith and T Co.’s weighted average...
Ankh-Sto Associates Co. is expected to generate a free cash flow (FCF) of $11,880.00 million this...
Ankh-Sto Associates Co. is expected to generate a free cash flow (FCF) of $11,880.00 million this year (FCF₁ = $11,880.00 million), and the FCF is expected to grow at a rate of 19.00% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 2.10% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Ankh-Sto Associates Co.’s weighted average cost of...
Globo-Chem Co. is expected to generate a free cash flow (FCF) of $9,980.00 million this year...
Globo-Chem Co. is expected to generate a free cash flow (FCF) of $9,980.00 million this year (FCF₁ = $9,980.00 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). Assume the firm has no nonoperating assets. If Globo-Chem Co.’s weighted average cost of capital (WACC)...
Omni Consumer Products Co. is expected to generate a free cash flow (FCF) of $7,470.00 million...
Omni Consumer Products Co. is expected to generate a free cash flow (FCF) of $7,470.00 million this year (FCF₁ = $7,470.00 million), and the FCF is expected to grow at a rate of 19.00% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 2.10% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Omni Consumer Products Co.’s weighted average...
Scampini Technologies is expected to generate $50 million in free cash flow next year, and FCF...
Scampini Technologies is expected to generate $50 million in free cash flow next year, and FCF is expected to grow at a constant rate of 6% per year indefinitely. Scampini has no debt or preferred stock, and its WACC is 11%. If Scampini has 45 million shares of stock outstanding, what is the stock's value per share? Round your answer to two decimal places. Each share of common stock is worth $____ , according to the corporate valuation model.
Scampini Technologies is expected to generate $150 million in free cash flow next year, and FCF...
Scampini Technologies is expected to generate $150 million in free cash flow next year, and FCF is expected to grow at a constant rate of 7% per year indefinitely. Scampini has no debt or preferred stock, and its WACC is 12%. If Scampini has 60 million shares of stock outstanding, what is the stock's value per share? Round your answer to two decimal places. Each share of common stock is worth $ , according to the corporate valuation model.
Scampini Technologies is expected to generate $25 million in free cash flow next year, and FCF...
Scampini Technologies is expected to generate $25 million in free cash flow next year, and FCF is expected to grow at a constant rate of 3% per year indefinitely. Scampini has no debt or preferred stock, and its WACC is 10%. If Scampini has 45 million shares of stock outstanding, what is the stock's value per share? Do not round intermediate calculations. Round your answer to the nearest cent. Each share of common stock is worth $   , according to the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT