Assume a Modigliani-Miller world. Antivaxer, PaleoBro and Boop are three similar companies in the wellness industry with the following capital structure and cash flows.
I'm looking to calculate the market value of each company please help
Homework Answers
| Particulars | AntiVaxer | PaleoBro | Boop | |
| Shares Outstanding (in Mn) | A | 10 | 6 | 20 |
| Share Price | B | 30 | 35 | 11 |
| Market Value of Equity (in Mn) | C=A*B | 300 | 210 | 210 |
| Market Value of perpetual debt (in Mn) | D | - | 105 | 390 |
| Value of Company | C+D | 300 | 315 | 600 |
Under MM approach dividends are irrelevant for decision making therefore it is assumed that dividend payout will not affect share price and current price is reflective of risks and rewards to this company.
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I'm looking to calculate the market value of each
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and Boop are three similar companies.
I'm looking to calculate the market value of each
company please help
Now assume companies must pay corporation tax at a rate of 30%. Interest is tax-deductible, there are no personal taxes, and markets are semi-strong form efficient. All other MM assump- tions still hold. (d) Re compute the fair share price for each company. Remember, the cash flows in the table above are in an MM world...
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