Question
Portage Bay Enterprises has $ 1 million in excess cash, no debt, and is expected to...
Portage Bay Enterprises has
$ 1
million in excess cash, no debt, and is expected to have free cash flow of
$ 11
million next year. Its FCF is then expected to grow at a rate of
3 %
per year forever. If Portage Bay's equity cost of capital is
13 %
and it has
66
million shares outstanding, what should be the price of Portage Bay stock?
The price of Portage Bay's stock is
per share. (Round to the nearest cent.)
Homework Answers
Answer #1
I have answered the question below
Please up vote for the same and thanks!!!
Do reach out in the comments for any queries
Answer:
= $11M/(13%-3%)
= 110,000,000
= (110000000-1000000)/66M
= 1.65
In order to find the stock price we need to calculate the firm value Firm Value = FCF WACC - Growth Rate
Therefore the stock price is, Fim Value +Excess Cash Value Stock Price = Shares Outstanding
Not the answer you're looking for?
Similar Questions
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.
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 $1 million in excess cash, no debt, and is expected to have...
Portage Bay Enterprises has $1 million in excess cash, no debt,
and is expected to have free cash flow of $10 million next
year.
Its FCF is then expected to grow at a rate of
3% per year forever.
If Portage Bay's equity cost of capital is 11% and it has 5
million shares outstanding, what should be the price of Portage Bay
stock?
Why is the answer = 10/(0.11-0.03), which is ($125 + $1)/5 =
25.2
and NOT =...
1. Assume Gillette Corporation will pay an annual dividend of $0.63 one year from now. Analysts...
1. Assume Gillette Corporation will pay an annual dividend of
$0.63 one year from now. Analysts expect this dividend to grow at
11.9% per year thereafter until the 66th year. Thereafter, growth
will level off at 2.2% per year. According to thedividend-discount
model, what is the value of a share of Gillette stock if the
firm's equity cost of capital is 8.9%?
The value of Gillette's stock is:
(Round to the nearest cent.)
2. Portage Bay Enterprises has $3 million...
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...
A company has $500 million in debt and 20 million shares of equity outstanding. Its excess cash...
A company has $500 million in debt and 20 million shares of
equity outstanding. Its excess cash reserves are $15
million. They are expected to generate $200 million in
free cash flows next year with a growth rate of 2% per year in
perpetuity. Creative Enterprise’s cost of equity capital
is 12%. How much would the price per share of stock
be?
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...
River Enterprises has $510million in debt and 17million shares of equity outstanding. Its excess cash reserves...
River Enterprises has $510million in debt and 17million shares
of equity outstanding. Its excess cash reserves are $ 13million.
They are expected to generate $203million in free cash flows next
year with a growth rate of 2% per year in perpetuity. River
Enterprises' cost of equity capital is 11%. After analyzing the
company, you believe that the growth rate should be 3% instead of
2%. How much higher (in dollars) would the price per share be if
you are right?...
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...
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...
ADVERTISEMENT
Need Online Homework Help?
Get Answers For Free
Most questions answered within 1 hours.
ADVERTISEMENT
Active Questions
asked 3 minutes ago
asked 4 minutes ago
asked 39 minutes ago
asked 42 minutes ago
asked 47 minutes ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 2 hours ago