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Question
SymbyrecPhonic, an electronics manufacturer, is expected to grow rapidly in the next five years and then have a stable growth rate for the foreseeable future. The firm expects free cash flows of $262.5 million next year. These cash flows are expected to grow at a 30 percent rate over the following four years, and thereafter its cash flows will grow at a steady rate of 6 percent per annum. The company has nonoperating assets (NOA) of $31 million in the form of cash. If the appropriate WACC is 9 percent, what is the enterprise value of this business? (Do not round intermediate computations. Round final answer to the nearest million.)A) $26,490 million
B) $22,222 million
C) $19,014 million
D) $22,191 million
Answer
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Related questions
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Consider a put option with a strike price of $40, which expires in one year. The risk-free rate of interest is 8 percent. The current underlying stock price is $20. Without arbitrage, which of the following is a possible price for the put option? (Round intermediate computations to two decimal places.)
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The claim lenders' hold on cash flows in a company with outstanding risky debt is often thought of as:
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B) holding a put option on the firm's assets.
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Q:
Bifive Homes, Inc., is a developer of planned residential communities. It has entered into an option contract with a land owner outside Austin, Texas. It will pay the land owner $100,000 for the option to buy the land in two years at a price of $20 million. During that time Bifive Homes will evaluate population and real estate trends in Austin. Its plan is to buy the land if real estate prices in Austin increase enough that developing the land would be worth more than the $20 million price. The $20 million purchase price resembles:
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Q:
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C) the stockholders default and the lenders receive the value of the firm.
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B) the premium of a call option on the plant.
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Q:
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A) Put options will be worth more, call options will be worth less.
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Which of the following statements is true of a call option?
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A) True
B) False
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If a firm adds financial options to its debt securities, it will increase the interest expense to the firm.
A) True
B) False
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Consider a call option on a stock with a strike price of $60. If the stock price at expiration is $50, the payoff from the call option is $10.
A) True
B) False