Question

Target Corp generated $10 billion of Operating Cash Flow last
year while spending $6 billion on investments in Fixed Assets
(capital expenditures) and an additional $0.5 billion on increases
in Working Capital. You expect Free Cash Flow to grow by 15% for
the next two years and then grow at 4% annually, forever. You
require a 15% expected annual return on your investment in
Target.

Estimate the value of Target using a discounted cash flow analysis,
assuming that Target has no debt outstanding.

Answer #1

ABC Corp. generated $500,000 in Free Cash Flow in the year that
ends today and paid the entire amount out to it's owners as a
dividend. Assuming their Free Cash Flow grows by 5% per year for
the next four year and then continues to grow at a 2.5% rate per
year forever, what is the value of ABC Corp. today assuming they
have need to Earn 9% returns for their owners?
Group of answer choices:
a)$8,447,000
b)$8,613,000
c)$9,113,000

You are valuing a company that generated free cash flow of $10
million last year, which is expected to
grow at a stable 3.0% rate in perpetuity thereafter. The company
has no debt and $8 million in cash. The market risk premium is
8.4%, the risk-free rate is 2% and the firm’s beta is 1.4. There
are 50 million shares outstanding. How much is each share worth
according to your valuation analysis?

You are valuing a company that generated free cash flow of $10
million last year, which is expected to grow at a stable 3.0% rate
in perpetuity thereafter. The company has no debt and $8 million in
cash. The market risk premium is 8.4%, the risk-free rate is 2% and
the firm’s beta is 1.4. There are 50 million shares outstanding.
How much is each share worth according to your valuation
analysis?

During the last year, Len Corp. generated $1,170.00 million in
cash flow from operating activities and had negative cash flow
generated from investing activities (-640.00 million). At the end
of the first year, Len Corp. had $200 million in cash on its
balance sheet, and the firm had $280 million in cash at the end of
the second year. What was the firm’s cash flow (CF) due to
financing activities in the second year?
$337.50 million
$562.50 million
$-225.00 million...

Question 7
You are valuing a company that generated free cash flow of $10
million last year, which is expected to
grow at a stable 3.0% rate in perpetuity thereafter. The company
has no debt and $8 million in cash. The market risk premium is
8.4%, the risk-free rate is 2% and the firm’s beta is 1.4. There
are 50 million shares outstanding. How much is each share worth
according to your valuation analysis?
1.
$2.75
2.
$2.02
3.
$2.07...

XYZ Corp. had operating income this year of $120 million and is
in the 40% tax bracket. The firm carried $200 million in debt at a
cost of 10% interest. This year's depreciation expense was $30
million. XYZ Corp. has budgeted $40 million in capital spending and
an additional $5 million in non-cash working capital. No change is
anticipated in the company's net debt. What is XYZ Corp.'s expected
free cash flow to equity (FCFE)?
Select one:
A. $15 million...

TLP corporation had operating cash flow of $3.20 per share last
year, and has 1.5 million shares outstanding. Operating cash flows
are expected to grow by 4% per year in the long run, i.e. forever.
To attain this growth, TLP will need to make new capital
expenditures in an amount equal to 40% of each year’s operating
cash flow. TLP also has existing liabilities with a market value of
$3 million.
(a) If TLP has no other assets, and a...

Praxis Corp. is expected to generate a free cash flow (FCF) of
$7,890.00 million this year ( FCF1 = $7,890.00 million), and the
FCF is expected to grow at a rate of 20.20% over the following two
years ( FCF2 and FCF3 ). After the third year, however, the FCF is
expected to grow at a constant rate of 2.46% per year, which will
last forever ( FCF4 ). If Praxis Corp.’s weighted average cost of
capital (WACC) is 7.38%,...

You are trying to calculate the enterprise value of DCB Corp
using a free cash flow model. To that end you have put together
some forecast for year 1 in the table below. Assume that free cash
flows will grow at 1.5% in perpetuity and that the weighted average
cost of capital of the firm (WACC) is 8%. Using this information,
calculate the enterprise value of the firm. Express your answer in
$-millions and round to two decimals (do not...

Neil’s Surf shop had firm-free cash flow of $33,000 last year
(year 0), which is expected to grow at 5% a year for the next five
years, after which it will grow at 2% for eternity. The appropriate
cost of equity is 15%. The surf shop has no debt or notable cash on
hand. Use a simple discounted cash flow (DCF) analysis to value the
surf shop. What is the present value of this company?
A 190,929.16
B 290,929.16
C...

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