Sally Corp. is an all-equity firm with 2000000 shares outstanding. Partition Corp has $22000000 in cash and expects future free cash flows of $120000000 per year. The cost of capital of Partition Corp. s investments is 8%
a. What would be the price of the stock (cum-dividend) if Sally Corp. where to issue dividends with the excess cash?
b. What would be the price of the stock (ex-dividend) if Sally Corp. where to issue dividends with the excess cash?
c. What would be the price of the stock if Sally Corp. where to perform a stock repurchase with the excess cash?
d. What is the amount of stock Sally Corp. could repurchase if the company performs a stock repurchase with the excess cash?
e. What would be the amount of stock outstanding of Sally Corp. after a stock repurchase with the excess cash?
f. Consider now that the management at sally Corp. plans instead to use the cash to expand the firm's operations, which will in turn increase future cash free cash flows to $5000000 per year. What would be the price of the stock if sally Corp. where to perform the firm s expansion?"
g. Consider now that the management at sallt Corp. plans instead to use the cash to expand the firm's operations, which will in turn increase future cash free cash flows to $5000000 per year. What would be the valuation of sally Corp. if the firm where to perform the expansion?"