Kohwe Corporation plans to borrow $47.7 million to finance a new investment. The
ID: 2739083 • Letter: K
Question
Kohwe Corporation plans to borrow $47.7 million to finance a new investment. The firm will pay interest only on this loan each year, and it will maintain an outstanding balance of $47.7 million on the loan. Suppose that Kohwe's corporate tax rate is 40% and expected free cash flows are $9.5 million each year. Kohwe currently has 5 million shares outstanding, and it has no other assets or opportunities. Suppose the appropriate discount rate for Kohwe's future free cash flows is 7.6%. What is Kohwe's share price today if the investment is financed with debt?
Kohwe's share price today is $___ per share.
Explanation / Answer
attached is the answer answe is 19.28 dollars
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