Please show work step by step,,Chapter 13, problems 13-4, 13-6 (a,b), 13 -7 (a,b,c), 13-9 ,EROIC & MVA of Constant Growth Firm:,13-4. A company has capital of $200 million. It has an EROIC of 9%, forecasted constant growth of 5%, and a WACC of 10%. What is its value of operations? What is its intrinsic MVA?,Value of Operations:,13-6. Brooks Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000 for the next 2 years, respectively; after the second year, FCF is expected to grow at a constant rate of 8%. The company’s weighted average cost of capital is 12%., • What is the terminal, or horizon, value of operations? (Hint: Find the value of all free cash flows beyond Year 2 discounted back to Year 2)., • Calculate the value of Brooks’s operations.,Corporate Valuation:,13-7. Dozier Corporation is a fast-growing supplier of office products. Analysis project the following free cash flows (FCFs) during the next 3 years, after which FCF is expected to grow at a constant 7% rate. Dozier’s weighted average cost of capital is WACC=13%., Year , 1 2 3,Free cash flow ($ millions) -$20 $30 $40, • What is Dozier’s terminal, or horizontal, value? (Hint: Find the value of all free cash flows beyond Year 3 discounted to Year 3)., • What is the current value of operations for Dozier?, • Suppose Dozier has $10 million in marketable securities, $100 million in debt, and 10 million shares of stock. What is the intrinsic price per share?,Price per Share:,13-9.The balance sheet of Roop Industries is shown below. The 12/31/2010 value of operations is $651 million, and there are 10 million shares of common equity. What is the intrinsic price per share?,Balance Sheet, December 31, 2010 (Millions of Dollars),Assets, , ,Liabilities and Equity, ,Cash,$20.0 ,,Accounts payable,$19.0 ,Marketable securities,47.0,,Notes payable,65.0,Accounts receivable,100.0,,Accruals,51.0,Inventories,200.0 ,, Total current liabilities,$135.0 , Total current assets,$367.0 ,,Long-term bonds,131.0,Net plant and equipment,279.0,,Preferred stock,33.0,,,,Common stock (par plus PIC),160.0,,,,Retained earnings,187.0,,,, Common equity,$347.0 ,Total assets,$646.0 ,,Total liabilities and equity,$646.0 ,,,,,,,Chapter 14, problems 14-2, 14-4, 14-5, 14-8. ,Residual Distribution Policy:,14-2. Petersen Company has a capital budget of $1.2 million. The company wants to maintain a target capital structure which is 60% debt and 40% equity. The company forecasts that is net income this year will be $600,000. If the company follows a residual distribution model and pays all distributions as dividends, what will be its payout ratio?,Stock Repurchase:,14-4. A firm has 10 million shares outstanding with a market price of $20 per share. The firm has $25 million in extra cash (short-term investments) that it plans to use in a stock repurchase; the firm has no other financial investments or any debt. What is the firm’s value of operations, and how many shares will remain after the repurchase?,Stock Split:,14-5. Gamma Medical’s stock trades at $90 a share. The company is contemplating a 3-for-2 stock split. Assuming the stock split will have no effect on the total market value of its equity, what will be the company’s stock price following the stock split?,Stock Split:,14-8. After a 5-for-1 stock split, the Strasburg Company paid a dividend of $0.75 per new share, which represents a 9% increase over last year’s pre-split dividend. What was last year’s dividend per share?,
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