Corporate valuation smith technologies is expected to

This preview shows page 3 - 5 out of 9 pages.

9-5 CORPORATE VALUATION Smith Technologies is expected to generate $150 million in free cash flow next year, and FCF is expected to grow at a constant rate of 5% per year indef- initely. Smith has no debt or preferred stock, and its WACC is 10%. If Smith has 50 million shares of stock outstanding, what is the stock's value per share?
9-6 PREFERRED STOCK VALUATION Fee Founders has perpetual preferred stock outstanding that sells for $60 a share and pays a dividend of $5 at the end of each year. What is the required rate of return?
9-7 WHAT WILL BE THE NOMINAL RATE OF RETURN ON A PREFERRED STOCKWITH A $100 PAR VALUE, A STATED DIVIDEND OF 8 PERCENT OF PAR, AND ACURRENT MARKET PRICE OF (A) $60, (B) $80, (C) $100, (D) $140?
9-8 PREFERRED STOCK VALUATION Ezzell Corporation issued perpetual preferred stock with a 10% annual dividend. The stock currently yields 8%, and its par value is $100. a. What is the stock's value? b. Suppose interest rates rise and pull the preferred stock's yield up to 12%. What is its new market value?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture