Bob hunts appliances paid 5000 in dividends in 2015 suppose


  1. Bob Hunts Appliances paid $5,000 in dividends in 2015. Suppose that an investor approached Henry about buying 100% of his firm. If this investor believed that by owning the company he could extract $5,000 per year in cash from the company in perpetuity, what do you think the investor would be willing to pay for the firm if the required return on this investment is 10%?
  2. Suppose that you believed that the FCF generated by Bob Hunts Appliances in 2015 could continue forever. You are willing to buy the company in order to receive this perpetual stream of free cash flow. What are you willing to pay if you require a 10% return on your investment?

 

 

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Finance Basics: Bob hunts appliances paid 5000 in dividends in 2015 suppose
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