Question

The company financials are given below: Net income €200m Depreciation expense €72m Interest expense €120m Increase...

The company financials are given below:

Net income

€200m

Depreciation expense

€72m

Interest expense

€120m

Increase in net working capital investment

€32m

Increase in fixed capital investment

€136m

Market value of debt

€1,440m

Cost of debt

8.5%

Cost of equity

14%

Tax rate

20%

Constant growth rate of free cash flow (forecasted)

4% (per year)

Capital Structure:

Debt

40%

Equity

60%

Number of shares outstanding

20,000,000

Find the following:

1.   Free cash flow to firm (actual):

2.Free cash flow to firm (next year forecast):

3. The weighted average cost of capital:

4.Value of the company (using FCF capitalization approach):

5.Value of equity:

6.Intrinsic value per share:

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