Question

You expect Tiger Corp will pay $50 million in dividends and repurchase $80 million of its...

You expect Tiger Corp will pay $50 million in dividends and repurchase $80 million of its stock over the next 12 months (Year 1). You expect dividends and share repurchases to grow 8% in Year 2 and 7% in Year 3. You also expect Tiger could be bought by a larger competitor at the end of Year 3 for $3.5 billion. If all payments are made at year end, and you have calculated the cost of equity to be 9.0%, what do you estimate the market value of Tiger’s net worth should be now? (Start by drawing a timeline.)

If Tiger Corp of Q #1 currently has 100,000,000 shares outstanding, what is your estimated market value per share now?

GEP Corp is considering a large plant expansion/modernization which will cost $115 million initially and another $70 million at the end of year 2. This project is expected to produce incremental after-tax profits of $35 million, $40 million, $35 million, $62 million, and $47 to be received at the end of years 1, 2, 3, 4 and 5 respectively. If the WACC is 7%, what is the project’s NPV? (Start by drawing a timeline.)

What is the MIRR for GEP’s project described in Q #3? (Use 7% WACC for both PV of costs and FV of returns. Your answer should be a % carried to 1 place.)

please answer handwritten with all the work shown thank you and no excel and no table for timeline

Homework Answers

Answer #1

Tiger Corp

GEP Corp

Good Luck

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. You expect Tiger Corp will pay $50 million in dividends and repurchase $80 million of...
1. You expect Tiger Corp will pay $50 million in dividends and repurchase $80 million of its stock over the next 12 months (Year 1). You expect dividends and share repurchases to grow 8% in Year 2 and 7% in Year 3. You also expect Tiger could be bought by a larger competitor at the end of Year 3 for $3.5 billion. If all payments are made at year end, and you have calculated the cost of equity to be...
expect Tiger Company will pay a dividend of $60 million and repurchase $90 million of its...
expect Tiger Company will pay a dividend of $60 million and repurchase $90 million of its common shares next year (Year 1) with both expected to grow 6% in Year 2 and 7% in Year 3. If you expect the company to be sold for $15 billion at the end of Year 3, and you have calculated the cost of equity to be 7.6%, what do you estimate the true value of the company’s net worth to be now? First...
You expect Sterling Company will pay a dividend of $60 million and repurchase $90 million of...
You expect Sterling Company will pay a dividend of $60 million and repurchase $90 million of its common shares next year (Year 1) with both expected to grow 6% in Year 2 and 7% in Year 3. If you expect the company to be sold for $15 billion at the end of Year 3, and you have calculated the cost of equity to be 7.6%, what do you estimate the true value of the company’s net worth to be now?...
Enterprise Corp typically pays 80% of its net income in dividends. A. Do you believe Enterprise...
Enterprise Corp typically pays 80% of its net income in dividends. A. Do you believe Enterprise has [many] or [few] good investment opportunities? B. Do you expect its net income to increase at a [fast] or [slow] rate? You expect Sterling Company will pay a dividend of $60 million and repurchase $90 million of its common shares next year (Year 1) with both expected to grow 6% in Year 2 and 7% in Year 3. If you expect the company...
4. Enterprise Corp typically pays 80% of its net income in dividends. A. Do you believe...
4. Enterprise Corp typically pays 80% of its net income in dividends. A. Do you believe Enterprise has [many] or [few] good investment opportunities? B. Do you expect its net income to increase at a [fast] or [slow] rate? 5. You expect Sterling Company will pay a dividend of $60 million and repurchase $90 million of its common shares next year (Year 1) with both expected to grow 6% in Year 2 and 7% in Year 3. If you expect...
1. C&D Corp’s stock is selling for $45/share. You expect dividends to be $.57/share over the...
1. C&D Corp’s stock is selling for $45/share. You expect dividends to be $.57/share over the next year (Year 1), $.63/share in Year 2 and $.69/share in Year 3, and you anticipate the stock will be trading at $65/share at the end of Year 3. Draw a timeline assuming all cash flows occur at the end of each year. If you have estimated C&D Corp’s Cost of Equity to be 7.8%, what do you believe the true value of the...
•T-Co is a successful company. You have estimated the cost of equity  to be11% and expect share...
•T-Co is a successful company. You have estimated the cost of equity  to be11% and expect share buybacks and dividends to grow 8%/year, and you believe the company could be sold for $2.4 billion at the end of Year 4 •Fill in Years 2 and 3 of the timeline below and calculate the company’s current market cap and share price given 100 million shares outstanding Timeline (in millions) Year 0 1 2 3 4 Dividends 45 BuyBacks 55 Div+Buybacks 100 Market...
You are analyzing Superior Corp for Fidelity’s Super Growth ETF and have projected the dividends, share...
You are analyzing Superior Corp for Fidelity’s Super Growth ETF and have projected the dividends, share buy-backs and future market cap for the next 4 years. Dividends/Buybacks are expected to be: $100/$200 (Year 1); $105/$218 (Year 2); $111/$240 (Year 3), and Market Cap $3,600 (Year 4). You have estimated Superior’s Required Return to be 8.5%. What is the estimated current market capitalization for Superior now? Before any calculations, draw a timeline. (Note: $ in Millions.)
If Qual Corp. currently trades at $35/ per share, with 2 million shares outstanding. Their total...
If Qual Corp. currently trades at $35/ per share, with 2 million shares outstanding. Their total debt is 35 million with 15- year maturity, semi-annual bond pricing at $780 now with $1000 par value. The coupon rate is 7%. This company has a Beta of 1.3, risk free rate is 3% and SP 500 index return is 10% now. With a tax rate 40%, please calculate the WACC. 1(a) How much is cost of debt before tax? ( In decimal...
You expect a share of stock to pay dividends of $2.00, $2.05, and $2.40 in each...
You expect a share of stock to pay dividends of $2.00, $2.05, and $2.40 in each of the next 3 years. You believe the stock will sell for $32.00 at the end of the third year. a. What is the stock price if the discount rate for the stock is 10%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is the dividend yield for year 1? (Do not round intermediate calculations. Enter your answer...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT