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Growth rate after 4 years = 7% Cash flow for year 5 = $15,000,000*1.07 = $16,050,000 WACC = 12% Value of free cash flows after year 4 at the end of 4 = $16,050,000 / (0.12-0.07) = $16,050,000 / 0.05 = $321,000,000 Free cash flow for year 4 =
Par value of preferred stock = $100 Annual dividend DP = 8% of $100 = $8 Required rate of return KP = 6% Market price of preferred stock= DP / KP = $8 / 0.06 = $133.33 Required rate of return KP = 10% Market price of preferred stock= $8 / 0.10 = $80 There
Face value = $1,000 Coupon rate = 12% Frequency of coupon payment = Semiannual Coupon payment = $1,000*12%*1/2 = $60 Time to maturity now = 14 – 2 = 12 years Required rate of return = 14% Value of bond today = $60*PVIFA14%/2, 12*2 + $1,000*PVIF14%/2,

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