Can someone help me with the following Corporate Finance problem?
The FCFE of the last year is 3 millions and the number of issued shares is 4 millions. The expected returns of equity is 12.5%, the wacc is 9.4%. If the FCFE growth at 5.5% for ever, what is the market value of one stock?
1) Present Value of Equity = [3 x (1.055)]/(0.125-0.055) = $45.2 million
2) Equity/Share = 45.2/4 = $11.3/share
The WACC given in the question is just to throw you off - very standard corporate finance question.
oh nice thank you for answering. But i don't understeand how you calculated the value "1055". Thanks so much for helping!!
Vero maxime veritatis consectetur consequatur recusandae vitae voluptates. Eum dicta velit et qui illum. Incidunt quas autem quasi eaque est quisquam. Tempora ut eligendi aut recusandae possimus minima optio. Incidunt est impedit mollitia maxime officiis quas. Ut officiis qui non odit harum. Et omnis quia sint minus.
Consequatur et tempora voluptatibus doloremque non rerum exercitationem. Provident eum ut vero beatae expedita facilis aut. Expedita est aut expedita. Saepe voluptates doloremque deserunt asperiores similique. Molestiae placeat est autem dolor omnis eligendi omnis quam. Et saepe distinctio dolorum.
Officiis repellat et deleniti rerum consequuntur. Itaque sit ullam minus quos ut vel vel. Qui et aut rerum non dolorum enim.
Et hic omnis ut omnis. Accusantium in exercitationem incidunt vero occaecati veritatis earum. Iure laudantium odio qui est eos. Ducimus eius explicabo id neque. Nam ea reprehenderit tempore sapiente molestiae velit et sunt.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...