This is one question but couldn\'t capture it in one shot. Please attempt to ans

Question

This is one question but couldn't capture it in one shot. Please attempt to answer it correctly. There are 6 values to be accounted for, and last question is asking for a
true or false, and
encourage or avoid.
Thanks

7. Dividends, repurchas's, and fi ·lue Remember that the primary goal of a firm is to maximize sharehoider wealth by increasing the firm's intrinsic value. It is thus important to Remember that the primary goal of a 5im is to maximize sharchoider wealth by understand the impact of distributions both in the form of dividends or stock repurchases-on the firm's value. Consider the following situation: Diana is a financial analyst in BTR Warehousing, As part of her analysis of the annual distribution policy and its impact on the firm's value, she makes the following calaulations and observations: olana is fhancal anajn. As part of her The company generated a free cash flow (FCF) of $75 million in its most recent fiscal year * The firm's cost of capital (WACC) is 12%. The firm has been growing at 8% for the past six years but is expected to grow at a constant rate of 7% in the future. The firm has 18.75 million shares outstanding. . The company has $200 million in debt and $125 million in preferred stock Along with the rest of the finance team, Diana has been part of board meetings and knows that the company is planning to distribute $105 million, which is invested in short-term investments, to its shareholders by buying back stock from its shareholders. Diana also observed that, at this point, apart from the $105 million in short-term investments, the firm has no other nonoperating assets using results from Diana's caloulations and observations, solve for the values in the following tables. Select the hest a selection list

Explanation / Answer

Details Amt $   Last free cash flow                           75.0 million Growth rate for FCFF =g= 7.0% WACC = 12% Firm Value =PV of future free cash flows=75*1.07/(0.12-0.07)                1,605.00 million So Enterprise Value = $            1,605.00 million Less Current Market value of Debt= $                200.00 million Less Preference share outstanding= $                125.00 Value of Equity = $            1,280.00 million Outstanding no of Common stock=                      18.75 million Price per share = $                  68.27 So Intrinsic value of firm=                   1,605.0 million Intrinsic value of equity prior to stock repurchase= $            1,280.00 million Intrinsic stock price prior to stock repurchase= $                  68.27 No of shares repurchased=              1,538,011 nos No of share after repurchase=            17,211,989 Intrinsic value of equity after stock repurchase=                   1,280.0 million Intrinsic stock price after repurchase= $                  74.37 The given statement is TRUE because a firm pays a dividend of $1 per share , the price per share of the form's stockwill also fall by $1 to AVOID any arbitrage opportunities.

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