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  3. 4. consider the following information: johnson lim

4. consider the following information: Johnson Limited and Judy Corporation, that have identical assets that...

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Finance

4. consider the following information:

Johnson Limited and Judy Corporation, that have identical assets that generate identical cash flows and identical weighted average cost of capital.

  • Johnson Limited is an all-equity firm, with 1 million shares outstanding that trade for a price of $34 per share.
  • Judy Corporation has 2 million shares outstanding and $12 million in debt at an interest rate of 5%.

Based on the given information, can we calculate the stock price of Judy Corporation? If yes, calculate it. If no, what additional information should be known in order to have sufficient information to calculate the stock price of Judy Corporation?

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