Company ZZZ is an all-equity firm with 1,000,000 shares outstanding. Company ZZZ currently has a cash flow
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"Company ZZZ is an all-equity firm with 1,000,000 shares outstanding. Company ZZZ currently has a cash flow of $25,000,000 USDs and expects future free cash flows of $30,000,000 per year. Management plans to use the cash to expand the firm's operations, which will in turn increase future cash free cash flows to $50,000,000 per year. If the cost of capital of Company ZZZ's investments is 12%, calculate the stock price if the company decides to use the cash for a share repurchase rather than the expansion. Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer."
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
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