bhp billiton headquartered in melbourne australia provides a variety of industrial m 543658
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:
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A. WACC
B. Value of the firm
C. Total market value of equity
D. Value per share
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