Maurice Tutor

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    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 24 Sep 2017 My Price 9.00

Watson Dunn

Watson Dunn is planning to value BHP Billiton Ltd. (NYSE: BHP) using a single stage FCFF approach. BHP Billiton, headquartered in Melbourne, Australia, provides a variety of industrial metals and minerals. The financial information Dunn has assembled for his valuation is as follows:

  • The company has 1,852 million shares outstanding.
  • Market value of debt is $3.192 billion.
  • FCFF is currently $1.1559 billion.
  • Equity beta is 0.90, the equity risk premium is 5.5 percent, and 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, assume the company is financed 25 percent with debt.
  • 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

Answers

Maurice Tutor
(5)
Status NEW Posted 24 Sep 2017 10:09 PM My Price 9.00

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