Question

9.05 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15....

9.05

  • 1.
  • 2.
  • 3.
  • 4.
  • 5.
  • 6.
  • 7.
  • 8.
  • 9.
  • 10.
  • 11.
  • 12.
  • 13.
  • 14.
  • 15.
  • 16.
  • 17.
  • 18.
  • 19.
  • 20.
  • 21.

Question Workspace

  • Check My Work
Click here to read the eBook: Enterprise-Based Approach to Valuation

CORPORATE VALUATION

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 7% per year indefinitely. Scampini has no debt or preferred stock, and its WACC is 14%. If Scampini has 35 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

Homework Answers

Answer #1

stock's value per share = value of equity/no. of shares of stock outstanding

Scampini has no debt or preferred stock. so, it's equity value is equal to its firm value.

firm value = [free cash flow next year*(1 + indefinite FCF growth rate)]/(WACC - indefinite FCF growth rate)

firm value = [$50 million*(1 + 0.07)]/(0.14 - 0.07) = ($50 million*1.07)/0.07 = $53.5‬ million/0.07 = $764.2857142857143‬ million

so, equity value is $764.2857142857143‬ million.

stock's value per share = $764.2857142857143‬ million/35 million = $21.84

the stock's value per share is $21.84.

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
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 $200 million in free cash flow next year, and FCF...
Scampini Technologies is expected to generate $200 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, preferred stock, or non-operating assets, and its WACC is 14%. If Scampini has 55 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...
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 $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...
CORPORATE VALUATION Scampini Technologies is expected to generate $150 million in free cash flow next year,...
CORPORATE VALUATION 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 13%. If Scampini has 65 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...
11) Holt Enterprises recently paid a dividend, D0, of $3.00. It expects to have nonconstant growth...
11) Holt Enterprises recently paid a dividend, D0, of $3.00. It expects to have nonconstant growth of 22% for 2 years followed by a constant rate of 7% thereafter. The firm's required return is 14%. How far away is the horizon date? The terminal, or horizon, date is the date when the growth rate becomes nonconstant. This occurs at time zero. The terminal, or horizon, date is the date when the growth rate becomes constant. This occurs at the beginning...
- Scampini Technologies is expected to generate $175 million in free cash flow next year, and...
- Scampini Technologies is expected to generate $175 million in free cash flow next year, and FCF is expected to grow at a constant rate of 5% per year indefinitely. Scampini has no debt or preferred stock, and its WACC is 15%. If Scampini has 55 million shares of stock outstanding, what is the stock's value per share? - Enterprises recently paid a dividend, D0, of $3.75. It expects to have nonconstant growth of 15% for 2 years followed by...
Click here to read the eBook: Enterprise-Based Approach to Valuation CORPORATE VALUATION Dantzler Corporation is a...
Click here to read the eBook: Enterprise-Based Approach to Valuation CORPORATE VALUATION Dantzler Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years, after which FCF is expected to grow at a constant 7% rate. Dantzler's WACC is 10%. Year 0 1 2 3 ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ...... FCF ($ millions) ($-5) $18 $41 What is Dantzler's...
The company ABC presented the following FCF: Year 1 2 3 4 5 FCF 10 12...
The company ABC presented the following FCF: Year 1 2 3 4 5 FCF 10 12 15 18 21 For the following years (6 to infinity), the FCF are expected to grow at 3% rate. The WACC of the firm is 14%. Using the discounted free cash flow model, what is the Enterprise Value of this firm?
The company ABC presented the following FCF: Year 1 2 3 4 5 FCF 10 12...
The company ABC presented the following FCF: Year 1 2 3 4 5 FCF 10 12 15 18 21 For the following years (6 to infinity), the FCF are expected to grow at 3% rate. The WACC of the firm is 14%. Using the discounted free cash flow model, what is the Enterprise Value of this firm?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT