Assume all cash flows are received at the end of each year


Samsung International has rice fields in California that are expected to produce average annual profits of $800,000 in real terms forever. Samsung has no depreciable assets and is an all equity firm with 200,000 shares outstanding. The appropriate discount rate for its stock is 12%. Samsung has an investment opportunity with a gross present value of $1M. The investment requires a $400,000 outlay now. Samsung has no other investment opportunities. Assume all cash flows are received at the end of each year. What is the price per share of Samsung?

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Finance Basics: Assume all cash flows are received at the end of each year
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