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You are an analyst in a major investment bank and have been…

You are an analyst in a major investment bank and have been assigned the task of determining the share price of Foodmart, a national supermarket chain. The stock beta is 1.286, Rf=3% and Rm=10%. The cost of debt is 6.82%. The tax rate is 34% and the firm is 40% debt financed. (a) Calculate the WACC for Foodmart. (b) The firm’s expected cash flow for this year is $60 million. After considerable analysis you have concluded that cash flows will grow at 6% per year until year 5 followed by 3.5% forever. The firm has $300 million in debt and 42 million shares outstanding. Calculate the target price. Show all work.  Asset = C1[1- ((1+gs)/(1+k))n] / (k-gs) + {C1(1+gs)n-1(1+gn)}/{k-gn)(1+k)n}     K = Ke(E/V) + Kd(1-t)(B/V)

You must:  1) Type your name in the answer box. 2) Copy the…

You must:  1) Type your name in the answer box. 2) Copy the bold statement below  on your paper and sign your name.  “On my honor as a student I have neither given nor received unauthorized aid on this assignment.”   By performing the above steps you are admitting to ONLY using these resources on this exam: Your own notes Graphing Calculator Desmos By performing the above steps you are admitting to NOT using any of the other resources:  ANY other person Google or any other website Your cell phone in any way (other to scan)  Any App besides the approved apps above Any other resource besides the approved list above If you type (or take a picture) of any problem given to you in this exam into ANY resource, that is considered plagiarism!!  If I believe that you have used outside resources on this exam then  I will arrange a personal zoom interview where you will need to describe the work to me done on your exam and/or be expected to work a similar problem in front of me with only the approved resources.  After the zoom interview (or if you refuse to join a zoom interview with me in an appropriate amount of time), if I still believe that work produced on the exam is not your own, then you will be given a 0% on this Exam, and XF in the class, and turned in the Honor and Integrity System. Links to an external site.