Question #233165

Ali Inc. expects to generate free-cash of $200000per year forever. If the firm's cost of capital is 0.15 percent,the firm cost of equity capital is 0.16 the market value of debt is $320000, the market value of preferred stock is $180000, and the company has 120000 shares of stock outstanding. What is the value of Ali's stock?what is the value of the firm

Answer for part 1


what is the value of the c.s?


1
Expert's answer
2021-09-07T07:48:02-0400

200000×0.15=30000200000 × 0.15 = 30000


0.16×320000=512000.16 × 320000 = 51200


30000+51200=8120030000+51200 = 81200


=81200+180000=261000= 81200 + 180000 = 261000


261000120000\frac{261000}{120000} =2.175= 2.175

Valueofstock=2.175Value of stock = 2.175


Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be the first!
LATEST TUTORIALS
APPROVED BY CLIENTS