Answered

At Westonci.ca, we provide reliable answers to your questions from a community of experts. Start exploring today! Get immediate and reliable solutions to your questions from a community of experienced experts on our Q&A platform. Get detailed and accurate answers to your questions from a dedicated community of experts on our Q&A platform.

Nighthawk theaters has 15,000 shares of stock outstanding and projected annual free cash flows of $48,200, $57,900, $71,300, and $72,500 for the next four years, respectively. after that, the cash flows are expected to increase at a constant annual rate of 1.6 percent. what is the current value per share of stock at a discount rate of 15.4 percent?

Sagot :

The current value per share of stock is $31.57.

What is the current value per share ?

The two-stage dividend model would be used to determine the current value per share of the stock. In the two-stage dividend growth model, the first stage is characterised by high growth rate. In the second stage, the high growth rate falls to a steady or normal growth rate

Total cash flows in the second stage of constant growth: (72,500 x 1.016) / (0.154 - 0.016) = 533,768.12

Now determine the present value of the cash flows:

($48,200 / 1.154) +  ($57,900 + 1/154²) + $71,300/ 1.154³ + ($72,500 / 1.154^4) + (533,768.12 / 1.154^4) = $473,495.26

Current value per share = $473,495.26  / 15,000 = $31.57

To learn more about how to determine the value of a stock, please check: https://brainly.com/question/15710204

#SPJ1

We appreciate your visit. Our platform is always here to offer accurate and reliable answers. Return anytime. Thank you for your visit. We're committed to providing you with the best information available. Return anytime for more. Westonci.ca is committed to providing accurate answers. Come back soon for more trustworthy information.