Question

Industrial Bruin Lights is expected to have $12 millions in free cash flows next year. The...

Industrial Bruin Lights is expected to have $12 millions in free cash flows next year. The growth rate of free cash flows is expected to be 14% in the following year, 12% in the year after that, and continue declining by 2% until it reaches 6%, where it is expected to remain indefinitely. The firm has no debt, and there are 6 million shares outstanding. Investors require 15% return on the company stock. The tax rate is 40%. What is your estimate of the current share price?

a. $14.75

b. $26.02

c. $55.42

d. $20.53

e. $40.77

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Industrial Bruin Lights is expected to have $33 millions in free cash flows next year. The...
Industrial Bruin Lights is expected to have $33 millions in free cash flows next year. The growth rate of free cash flows is expected to be 14% in the following year, 12% in the year after that, and continue declining by 2% until it reaches 6%, where it is expected to remain indefinitely. The firm has no debt, and there are 6 million shares outstanding. Investors require 15% return on the company stock. The tax rate is 40%. What is...
Maslyn Manufacturing has projected sales of $148 million next year. Costs are expected to be $82.5...
Maslyn Manufacturing has projected sales of $148 million next year. Costs are expected to be $82.5 million, and net investment is expected to be $16.5 million. Each of these values is expected to grow at 15 percent the following year, with the growth rate declining by 2 percent per year until the growth rate reaches 7 percent, where it is expected to remain indefinitely. There are 7 million shares of stock outstanding and investors require a return of 14 percent...
5. Wall Inc. forecasts that it will have the free cash flows (in millions) shown below....
5. Wall Inc. forecasts that it will have the free cash flows (in millions) shown below. The weighted average cost of capital is 10% and the free cash flows are expected to continue to grow at 8.2 percent after Year 3 indefinitely. Year 1 2 3 Free cash flow $10.00 -$48.00 $150.50 A. Calculate the firm’s FCF for year 4. B. Calculate the Horizon value in year 3. C. Assuming a $150 million for the company’s total market value of...
Fincher Manufacturing has projected sales of $147 million next year. Costs are expected to be $82...
Fincher Manufacturing has projected sales of $147 million next year. Costs are expected to be $82 million and net investment is expected to be $16 million. Each of these values is expected to grow at 15 percent the following year, with the growth rate declining by 2 percent per year until the growth rate reaches 7 percent, where it is expected to remain indefinitely. There are 6.5 million shares of stock outstanding and investors require a return of 14 percent...
A company is expected to have free cash flows of $1.75 million next year. The weighted...
A company is expected to have free cash flows of $1.75 million next year. The weighted average cost of capital is WACC= 12% and the expected constant growth rate is g=6%. The company has $1.5 million in short-term investments, $2 million in debt, and 1.5 million shares. What is the stock’s current intrinsic stock price?
The free cash flows (in millions) shown below are forecast by Simmons Inc. Year: 1 2...
The free cash flows (in millions) shown below are forecast by Simmons Inc. Year: 1 2 3 Free cash flow: -$25 $50 $55 respectively. If the weighted average cost of capital is 12% and the free cash flows are expected to continue growing at the same rate after Year 3 as from Year 2 to Year 3, what is the Year 0 value of operations, in millions? The balance sheet shows $25 million of short-term investments that are unrelated to...
Heavy Metal Corporation is expected to generate the following free cash flows over the next five...
Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: Year 1 2 3 4 5 FCF ($ millions) 53 68 78 75 85 After then, the free cash flows are expected to grow at the industry average of 4% per year. Using the discounted free cash flow model and a weighted average cost of capital of 14%: A. Estimate the geometric mean growth rate (also known as CAGR=Compound Average Growth Rate) of...
DO BY HAND AND ON EXCEL A project has expected cash flows of $55 next year...
DO BY HAND AND ON EXCEL A project has expected cash flows of $55 next year (year 1). These cash flows will grow at 6% per year through year 6. Growth from year 6 to 7 will be -2%, and this negative growth will continue in perpetuity. Assume a discount rate of 8%. What is the present value today (year 0) of these cash flows? (For this problem, feel free to use Excel, or you can do this by hand...
The free cash flows (in millions) shown below are forecast by Parker & Sons. If the...
The free cash flows (in millions) shown below are forecast by Parker & Sons. If the weighted average cost of capital is 11% and FCF is expected to grow at a rate of 5% after Year 2, what is the Year 0 value of operations, in millions? Assume that the ROIC is expected to remain constant in Year 2 and beyond (and do not make any half-year adjustments). Year 1 Cash Flow -$50 Year 2 Cash Flow $100
Quantitative Problem 2: Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year...
Quantitative Problem 2: Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 1 2 3 4 5 FCF -$22.47 $37.2 $43.4 $51.3 $56.7 The weighted average cost of capital is 12%, and the FCFs are expected to continue growing at a 3% rate after Year 5. The firm has $24 million of market-value debt, but it has no preferred stock or any other outstanding claims. There are 19 million shares outstanding. What is the value of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT