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Their planned capital budget for the upcoming year is $100.5 million. Their forecasted net income is $150.0 million. The firm has $50.0 million in short-term investments. The firm’s value of operations is $1,937.5 million. The firm carries $242.2 million in debt, and has no preferred stock. There are 100 million shares outstanding.

Assume now that the firm has distributed the dividends calculated in question 2. (question 2: Calculate, based on the existing capital structure of 87.5 percent equity, how much equity and debt must be raised to finance the planned capital budget.)

a. What would be the new intrinsic value of the equity and the new intrinsic price per share?

b. What would be the new dividend per share?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92082741

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