Jamestown Corp Year 0 Cash & equivalents $40 million Interest expense $7.2 million Capital Expenditures per share
Question:
Jamestown Corp
Year 0
Cash & equivalents $40 million
Interest expense $7.2 million
Capital Expenditures per share $2.4
Working Capital Investment per share $1.7
Market Value of Equity per share $56
Target debt ratio 30%
Cost of equity (CAPM) 12%
Depreciation (per share) $1.8
Tax rate 37.5%
Net Income (earnings) per share$5
Shares outstanding 5 million
Earnings, capex, depreciation and working capital will all grow at 5% in the future.
Use the data below to answer the following question: What will be FCFE in year 1 for ABC Corp?
$3.56
$4.31
$4.53
$4.65
The value of Jamestown Corp. is closest to:
$48.36
$50.86
$61.57
$64.71
If Jamestown Corp is currently selling for $56, the stock (based on our analysis) is:
Overvalued
Undervalued
Correctly valued
Cannot be determined
If Jamestown became an acquisition target and another company offered $450 million to buy it, and the current market price represents the fair value of equity, then:
Jamestown management should not take is since $450 is more than the total value of the firm
Jamestown management should not take is since $450 is less than the total value of the firm
Jamestown management should take is since $450 is more than the total value of the firm
Jamestown management should take is since $450 is less than the total value of the firm
Fundamentals of Corporate Finance
ISBN: 978-0133400694
1st canadian edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford, David A. Stangeland, Andras Marosi