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.