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uala Co is a geared company, with 1 million $0.50 par value shares in issue, and $500,000 of bonds in issue, trading at $80 per $100 of nominal value. It has a money cost of capital of 14%. The company generated free cash flow to equity of $1.5 million in the most recent year and the directors expect this figure to grow by 4% per annum in the future.
What is the estimated value of an KualaCo share?
the answer is 15.6
i don’t understand why we didn’t include the bond in the calculation?
this is from kaplan course
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