Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. river enterprises has $501 million in debt and 20

River Enterprises has $501 million in debt and 20 million shares of equity outstanding. Its...

80.2K

Verified Solution

Question

Accounting

River Enterprises has $501 million in debt and 20 million shares of equity outstanding. Its excess cash reserves are $15 million. They are expected to generate $209 million in free cash flows next year with a growth rate of 2% per year in perpetuity. River Enterprises' cost of equity capital is 13%. After analyzing the company, you believe that the growth rate should be 3% instead of 2%. How much higher (in dollars) would the price per share be if you are right?
9.50
None of the answers mentioned
8.50
7.50
image

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

A pension fund manager is considering three mutual funds. The first is a stock fund, the...

Finance
Q

Write a detailed essay on lisinopril.

Medical Sciences
Q

4. (a) Are business managers microeconomic or macroeconomic market participants? Explain. (b) Do most business managers...

Economics
Q

Volunteer Corporation reported taxable income of $470,000 from operations this year. During the year, the company...

Accounting
Q

Using the learning resources complete the data table below Pollutant Coliform Bacteria Heavy Metals Nutrient...

Biology
Q

How do analogous structures serve as evidence to support the theory of evolution through natural...

Biology
Q

The position of an engine's piston, in inches, is given by the trigonometric function p(t)...

Basic Math
Q

Perdon Corporation manufactures safes-large mobile safes, and...

Accounting
Q

BRONZE, INCORPORATED Income Statements (amounts in billions) For the...

Accounting
Q

2. Glycogen Corp began working in 2018 on a contract for $1,200,000. Other data are...

Accounting
Q

Gothic Architecture is a new chain of clothing stores specializing in the color black. Gothic...

Accounting
Q

Capital budgeting decisions are among the most important decisions facing business entities. Suggest specific milestones...

Accounting