Summarize and discuss the implications of the findings for the business or potential business transaction. ---------------- McCaffrey's Inc. has never paid a dividend, and when the firm might begin...

Summarize and discuss the implications of the findings for the business or potential business transaction.

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McCaffrey's Inc. has never paid a dividend, and when the firm might begin paying dividends is not known. Its current free cash flow (FCF) is $100,000, and this FCF is expected to grow at a constant 7% rate. The weighted average cost of capital (WACC) is 11%. McCaffrey's currently holds $325,000 of non-operating marketable securities. Its long-term debt is $1,000,000, but it has never issued preferred stock. McCaffrey's has 50,000 shares of stock outstanding.

1. McCaffrey's value of operations - $2,675,000


2. The company's total value - $3,000,000


3. The estimated value of common equity - $2,000,000


4. The estimated per-share stock price - $40