Please Solve 3 Questions Correctly. Thanks The PV of XYZ Corp.\'s future operati

Question

Please Solve 3 Questions Correctly. Thanks

The PV of XYZ Corp.'s future operating free-cash now is $500 million. It has debt outstanding of $30 million and cash and marketable securities of $10 million. It also owns an undeveloped tract of land recently appraised for $8 million. There are 5 million common shares outstanding. What is the estimated value of each share of stock? Next year ABC Co. is protected to have FCFF equal to $50 million. Growth is expected to be 2% in perpetuity.The Company's WACC is 14%. What is the value of the company? Consolidated Manufacturing Corp. would like to determine its cost of equity. It provides you with the following information: Risk-free rate: 3% ERP: 6.1% Stock beta: 1.6 Using the Capital Asset Pricing Model, what is the cost of equity? %

Explanation / Answer

VALUE OF COMPANY = FCFF * (1+g) / ( WACC - g )

= 50 * (1.02) / ( .14-.02 )

= $ 425 MILLION

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