Skip Ventures (SV) is a leading-edge investment firm that incubates and invests

Question

Skip Ventures (SV) is a leading-edge investment firm that incubates and invests in early-stage ventures. Yesterday, the firm paid a $15 dividend to investors who own its 50 million shares. The company%u2019s stockholders expect 50% return, and CC%u2019s dividends are expected to grow at 20% annually. The firm just sold bonds with $600 million par value. They pay 10% semi-annually for 7 years. The market rate for bonds of similar risk is 12%. What is the firm%u2019s market cap, debt cap, and enterprise value

Explanation / Answer

dividend = $15

no of shares = 50,000000

r =50%

g = 20%

bonds = $600,000000

10% semi annually

time = 7 years

r = 12 %

price of share = 15*1.2/(.5-.2) = $60

total share value = market cap = 50000000*60 = $3000,000,000

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