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Use the following information to answer questions 6 and 7:
An analyst gathered the following information regarding Diago Investments:
- FCFF at the end of 2011 = $1.1 million
- Interest expense = $525,000
- Fixed capital expenditure = $650,000
- Working capital expenditure = $280,000
- Depreciation expense = $395,000
- Net borrowing = $480,000
- Number of common shares outstanding = 600,000
- Weighted average cost of capital = 14%
- Risk free rate of return = 5%
- Equity market risk premium = 7%
- Beta of the company's stock = 1.1
- Expected long-term growth rate in FCFE = 6%
- Tax rate = 40%
Question: FCFE per share at the end of 2011 is closest to:
Select one:
a. $2.99
b. $2.11
c. $3.82
Question 7
Question text
The value per share of the company's stock at the end of 2011 is closest to:
Select one:
a. $33.36
b. $27.93
c. $31.47
Answer & Explanation
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