22 Jul WHAT WILL BE THE VALUE OF EQUITY OF THE FIRM?
A company will have free operating cash flows of $2million a year from now which are expected to gro Show more A company will have free operating cash flows of $2million a year from now which are expected to grow at a rate of 5% for the next 5 years and then grow at a 4% indefinitely. The corporate cost of capital is 10% and the amount of debt is $5 million. The number of outstanding number of shares is 800000. What is the companys total value? What is the value of its common equity? What is the value per stock Assume another company had the following information related to the free cash flows to equity holders in amount of $1.5 million a year from now and also growing at the same rates as given above. The cost of equity is 12%. What will be the value of equity of the firm? What will be the value of the company if it has a debt of $7.5 million? Show less
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