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Watson Dunn is planning to value BCC Corporation, a provider of a variety of Industrial metals and minerals. Dunn uses a single-stage FCFF approach. The financial information Dunn has assembled for his valuation is as follows:

• The company has 1,852 million shares outstanding.

• The market value of its debt is $3.192 billion.

• The FCFF is currently $1.1559 billion.

The equity beta is 0.90; the equity risk premium is 5.5 percent; the risk-free rate is 5.5 percent.

• The before-tax cost of debt is 7.0 percent.

• The tax rate is 40 percent.

• To calculate WACC, he will assume the company is financed 25 percent with debt.

• The FCFF growth rate is 4 percent.

Using Dunn's information, calculate the following:

A. WACC.

B. Value of the firm.

C. Total market value of equity.

D. Value per share.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M93041935

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