1. The cash flow for the Oboy firm's project is -$40 million in year 0 and $19...
Question:
1. The cash flow for the Oboy firm's project is -$40 million in year 0 and $19 million in years 1-4, the FCF is expected to grow at a constant rate of 0.029. The firm's discount rate is 0.062. if cash is $4.1 million, the market value of the firm's debt is 12.7 million, and the number of shares outstanding is 5.2 million, estimate the share price using the Discounted free cash flow.
Please provide a step by step accurate solution
2. Suppose Ultimate fashion has a project opportunity. The project has an initial cost of $10 million the first year, $2 million the second year and will increase by 0.13 per year thereafter, Ultimate has an equity mcost of capital of 0.056, a capital structure of 40% equity and 60% det, and has a tax rate of 0.33. What is the NPV of this project?
Intermediate Financial Management
ISBN: 978-1285850030
12th edition
Authors: Eugene F. Brigham, Phillip R. Daves