11 May WHAT IS THE PRESENT VALUE OF OPERATIONS?
What is the terminal value of the company? (Hint: determine the value of effective free flows
after year 3, net for the year.)
b. What is the present
value of operations?
VMA 13-6
A company has a capital of $
200 million. Wait a return on
equity
invested 9%, forecasted
constant growth of 5% and an average cost
weighted capital of 10%. What is the value of
its operations? And what is its
value
aggregate market?
15-5
Payment of dividends
Wei Corporation expects net income of $ 15 million next year. the reason
debt is currently 40%. Has profitable investment opportunities for $ 12
million and does not change the ratio of debt. Under the distribution model
residual (and assuming all payments are made in dividends), how much should
ascend its dividend payout ratio in the next year?
Policy 15-7
residual distribution
Welch Company is
considering three independent projects,
each of which
requires an investment of $ 5 million.
Then the internal
rate of return is appended
estimated (TIR) and
the capital cost of the projects:
Project A (high risk): Cost
of capital projects
Project A (high risk):
Cost of Capital
= 16%; IRR = 20%
Project M (Medium risk):
Cost of Capital = 12%; IRR = 10%
Project B (low risk):
Cost of Capital
= 8%; IRR = 9%
Note that the cost of capital varies because the level of project risk is not
equal. The optimal capital structure calls for 50% debt and 50% common
stock.
The company expects net income of
$ 7,287,500. Which is why if based payment
dividends on the residual
model (all distributions are made ??through
dividends)?
2.Keiser University has warrants
on the market that allows people who own it are allowed to buy 1 share of University at the price of $ 25 . to. Calculate the value of the warrants of execution
of the organization if the common
shares are sold to each the following rates: (1) $ 20, (2) $ 25, (3) $ 30),
(4) $ 100. (NOTE: The value of a warrant of execution is the difference between the stock price and the purchase price specified
by the warrant if the
authorization is executed.)
3. Everglades University, Inc. planned to finance their growth. Main company executives agreed that a
university such as yours should finance growth through the sale of common
shares and no debt. However, they felt that the current $ 42 for the price of
the common shares of the company does not reflect their true value, so they
decided to sell a convertible security. Considered a convertible bond they
feared the burden of fixed interest if the common stock does not increase
enough in price to make conversion attractive. They decided to offer a
convertible preferred stock, which paid a dividend of $ 2.10 per share.
a. The conversion ratio will be 1.0; that is, each part of the action
convertible preferred can be converted into one share of common stock.
Therefore, the nominal value of the convertible (and the issue price) will be
equal to the conversion price, which in turn will be determined as a reward
(ie, the percentage by which the conversion price exceeds the stock price) on
the current market price of the common stock. What if the conversion price is
set at a10% premium? And a prize a30%?
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