Question

The market values of BNT' debt and equlity are $250m and &400m respectively (t=0). The company...

The market values of BNT' debt and equlity are $250m and &400m respectively (t=0).
The company has $28m cash and the company is expexted to generate $36m free cash flow in this financial year (t=1). Assume, the WACC of the company is 10%. What is the sustainable growth rate of BNT as implied by the Gordon Growth Model?

Homework Answers

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
Assume the company has weight of debt WD = 80%, cost of debt RD = 15%,...
Assume the company has weight of debt WD = 80%, cost of debt RD = 15%, for un-leveraged firm: Bu =1; the company has Tax Rate = 40%, risk-free rate Rf = 4%, Market Return = 10%, free cash flow FCF0 = 200 million, growth rate g = 4%. Use the following formula for beta of leveraged company: B = Bu [1+ (1-T) × (WD /WS)], What is the WACC and what is the value of the firm? Please show...
A private firm has equity of 4000 and debt of 1000 (book values) and a FCFF...
A private firm has equity of 4000 and debt of 1000 (book values) and a FCFF of 100. The risk premium is 6%, the risk-free rate 3% and the corporate tax rate 30%. Cost of debt is 4% and the expected growth rate of FCFF is 2% forever. The firm operates in a sector with an unlevered beta of 0.5. Assume that the book and market values of debt are the same. Find the “market” value of equity that produces...
Company’s financials: Market value of debt € 500,000 Cost of debt 7% Tax rate 20% Adjusted...
Company’s financials: Market value of debt € 500,000 Cost of debt 7% Tax rate 20% Adjusted beta 1.6 Risk-free rate of return 4% Equity risk premium 5% Optimal capital structure: Debt – 45%, equity – 55% Free cash flow (current year) € 82,000 Projected long-term growth rate in free cash flow 4% Number of shares outstanding 22,000 Assume that the free cash flow to the firm is expected to grow indefinitely. Using the DCF method, estimate: 1. the value of...
Blackbriar’s most recent free cash flow to the firm (FCFF) is $5,000,000. The company’s target debt-to-equity...
Blackbriar’s most recent free cash flow to the firm (FCFF) is $5,000,000. The company’s target debt-to-equity ratio is 0.25. The company has 2 million shares of common stock outstanding and the market value of the firm’s debt is $10 million. The firm’s tax rate is 40%, the cost of equity is 10%, the firm’s pre-tax cost of debt is 8%, and the expected long-term growth rate in FCFF is 5%. Estimate the equity value per share using a single-stage free...
Blackbriar’s most recent free cash flow to the firm (FCFF) is $5,000,000. The company’s target debt-to-equity...
Blackbriar’s most recent free cash flow to the firm (FCFF) is $5,000,000. The company’s target debt-to-equity ratio is 0.25. The company has 2 million shares of common stock outstanding and the market value of the firm’s debt is $10 million. The firm’s tax rate is 40%, the cost of equity is 10%, the firm’s pre-tax cost of debt is 8%, and the expected long-term growth rate in FCFF is 5%. Estimate the equity value per share using a single-stage free...
A company has a targeted capital structure of 50% debt and 50% equity. Bond (debt) with...
A company has a targeted capital structure of 50% debt and 50% equity. Bond (debt) with face value (or principal amount) of $1200.00 paid 12% coupon annually, mature in 20 years and sell for $950.90. The company’s stock beta is 1.4, the risk free rate is 9% and market risk premium is 6%. The company has a constant growth rate of 6% and a just paid dividend of $3 and sells at $32 per share. If the company’s marginal, tax...
Suppose that you have following information about the company: - The company has 2 billion shares...
Suppose that you have following information about the company: - The company has 2 billion shares outstanding - The market value of its debt is € 4 billion - The free cash flow to the firm is currently € 1.2 billion - The equity beta is 0.9; the equity (market) risk premium is 7.5%; the risk-free rate is 3.5% - The before-tax cost of debt is 7% - The tax rate is 20% - The company is currently and in...
A company has a market value of equity of $210,110, and a market value of debt...
A company has a market value of equity of $210,110, and a market value of debt of $169,780. The company's levered cash flow (i.e. cash flow after paying all interest) is $29,295 and is distributed annually as dividends in full. The interest rate on the debt is 6.34%. You own $27,430 worth of the market value of the company's equity. Assume that the cash flow is constant in perpetuity, there are no taxes, and you can borrow at the same...
Calculate the Future Growth Value of below company             Total Market Value of Debt                =   &nbsp
Calculate the Future Growth Value of below company             Total Market Value of Debt                =          £260million             Total Market Value of Equity              =          £400million             Book Value of Stockholder’ equity     =          £300million             Total Capital (in Book value)              =          £500million             WACC                                      =          12% p.a.             Current year’s EVA (t=0)                 =          £10million
A company has a market value of equity of $465,710, and a market value of debt...
A company has a market value of equity of $465,710, and a market value of debt of $391,540. The company's levered cash flow (i.e. cash flow after paying all interest) is $75,795 and is distributed annually as dividends in full. The interest rate on the debt is 9.22%. You own $59,230 worth of the market value of the company's equity. Assume that the cash flow is constant in perpetuity, there are no taxes, and you can borrow at the same...