Question

Brandtly Industries invests a large sum of money in R&D; as a result, it retains and reinvests all of its earnings. In other words, Brandtly does not pay any dividends, and it has no plans to pay dividends in the near future. A major pension fund is interested in purchasing Brandtly's stock. The pension fund manager has estimated Brandtly's free cash flows for the next 4 years as follows: $2 million, $5 million, $9 million, and $16 million. After the fourth year, free cash flow is projected to grow at a constant 3%. Brandtly's WACC is 12%, the market value of its debt and preferred stock totals $62 million; and it has 14 million shares of common stock outstanding.

Write out your answers completely. For example, 13 million should be entered as 13,000,000.

- What is the present value of the free cash flows projected
during the next 4 years? Round your answer to the nearest cent. Do
not round your intermediate calculations.

$ - What is the firm's horizon, or continuing, value? Round your
answer to the nearest cent.

$ - What is the firm's total value today? Round your answer to the
nearest cent. Do not round your intermediate calculations.

$ - What is an estimate of Brandtly's price per share? Round your answer to the nearest cent. Do not round your intermediate calculations.

Answer #1

Brandtly Industries invests a large sum of money in R&D; as
a result, it retains and reinvests all of its earnings. In other
words, Brandtly does not pay any dividends, and it has no plans to
pay dividends in the near future. A major pension fund is
interested in purchasing Brandtly's stock. The pension fund manager
has estimated Brandtly's free cash flows for the next 4 years as
follows: $3 million, $5 million, $9 million, and $16 million. After
the...

Brandtly Industries invests a large sum of money in R&D; as
a result, it retains and reinvests all of its earnings. In other
words, Brandtly does not pay any dividends, and it has no plans to
pay dividends in the near future. A major pension fund is
interested in purchasing Brandtly's stock. The pension fund manager
has estimated Brandtly's free cash flows for the next 4 years as
follows: $3 million, $5 million, $8 million, and $15 million. After
the...

Brandtly Industries invests a large sum of money in R&D; as
a result, it retains and reinvests all of its earnings. In other
words, Brandtly does not pay any dividends, and it has no plans to
pay dividends in the near future. A major pension fund is
interested in purchasing Brandtly's stock. The pension fund manager
has estimated Brandtly's free cash flows for the next 4 years as
follows: $3 million, $7 million, $11 million, and $15 million.
After the...

Brandtly Industries invests a large sum of money in R&D; as
a result, it retains and reinvests all of its earnings. In other
words, Brandtly does not pay any dividends, and it has no plans to
pay dividends in the near future. A major pension fund is
interested in purchasing Brandtly's stock. The pension fund manager
has estimated Brandtly's free cash flows for the next 4 years as
follows: $4 million, $5 million, $10 million, and $14 million.
After the...

Brandtly Industries invests a large sum of money in R&D; as
a result, it retains and reinvests all of its earnings. In other
words, Brandtly does not pay any dividends, and it has no plans to
pay dividends in the near future. A major pension fund is
interested in purchasing Brandtly's stock. The pension fund manager
has estimated Brandtly's free cash flows for the next 4 years as
follows: $2 million, $5 million, $9 million, and $16 million. After
the...

Brandtly Industries invests a large sum of money in R&D; as
a result, it retains and reinvests all of its earnings. In other
words, Brandtly does not pay any dividends, and it has no plans to
pay dividends in the near future. A major pension fund is
interested in purchasing Brandtly's stock. The pension fund manager
has estimated Brandtly's free cash flows for the next 4 years as
follows: $4 million, $7 million, $12 million, and $15 million.
After the...

Brandtly Industries
invests a large sum of money in R&D; as a result, it retains
and reinvests all of its earnings. In other words, Brandtly does
not pay any dividends, and it has no plans to pay dividends in the
near future. A major pension fund is interested in purchasing
Brandtly's stock. The pension fund manager has estimated Brandtly's
free cash flows for the next 4 years as follows: $4 million, $5
million, $10 million, and $13 million. After the...

Brandtly Industries invests a large sum of money in R&D; as
a result, it retains and reinvests all of its earnings. In other
words, Brandtly does not pay any dividends, and it has no plans to
pay dividends in the near future. A major pension fund is
interested in purchasing Brandtly's stock. The pension fund manager
has estimated Brandtly's free cash flows for the next 4 years as
follows: $3 million, $7 million, $8 million, and $15 million. After
the...

Brandtly Industries invests a large sum of money in R&D; as
a result, it retains and reinvests all of its earnings. In other
words, Brandtly does not pay any dividends, and it has no plans to
pay dividends in the near future. A major pension fund is
interested in purchasing Brandtly's stock. The pension fund manager
has estimated Brandtly's free cash flows for the next 4 years as
follows: $4 million, $7 million, $9 million, and $15 million. After
the...

Brandtly Industries invests a large sum of money in R&D; as
a result, it retains and reinvests all of its earnings. In other
words, Brandtly does not pay any dividends, and it has no plans to
pay dividends in the near future. A major pension fund is
interested in purchasing Brandtly's stock. The pension fund manager
has estimated Brandtly's free cash flows for the next 4 years as
follows: $4 million, $5 million, $12 million, and $14 million.
After the...

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