Question

5. Wall Inc. forecasts that it will have the free cash flows (in millions) shown below. The weighted average cost of capital is 10% and the free cash flows are expected to continue to grow at 8.2 percent after Year 3 indefinitely. Year 1 2 3 Free cash flow $10.00 -$48.00 $150.50

A. Calculate the firm’s FCF for year 4.

B. Calculate the Horizon value in year 3.

C. Assuming a $150 million for the company’s total market value of debt and preferred stock, and 20 million shares outstanding calculate the CURRENT intrinsic value per share. Show all your work.

Answer #1

Hadley Inc. forecasts the year-end free cash flows (in millions)
shown below.
Year
1
2
3
4
5
FCF
-$22.92
$38.3
$43.1
$52.1
$56.8
The weighted average cost of capital is 10%, and the FCFs are
expected to continue growing at a 4% rate after Year 5. The firm
has $24 million of market-value debt, but it has no preferred stock
or any other outstanding claims. There are 20 million shares
outstanding. What is the value of the stock price...

Hadley Inc. forecasts the year-end free cash flows (in millions)
shown below.
Year
1
2
3
4
5
FCF
-$22.54
$37.9
$44
$52.6
$56.2
The weighted average cost of capital is 9%, and the FCFs are
expected to continue growing at a 4% rate after Year 5. The firm
has $26 million of market-value debt, but it has no preferred stock
or any other outstanding claims. There are 19 million shares
outstanding. What is the value of the stock price...

Quantitative Problem 2: Hadley Inc. forecasts
the year-end free cash flows (in millions) shown below.
Year
1
2
3
4
5
FCF
-$22.47
$37.2
$43.4
$51.3
$56.7
The weighted average cost of capital is 12%, and the FCFs are
expected to continue growing at a 3% rate after Year 5. The firm
has $24 million of market-value debt, but it has no preferred stock
or any other outstanding claims. There are 19 million shares
outstanding. What is the value of...

Quantitative Problem 2: Hadley Inc. forecasts
the year-end free cash flows (in millions) shown below.
Year
1
2
3
4
5
FCF
-$22.02
$38.2
$43.8
$52.5
$56.4
The weighted average cost of capital is 10%, and the FCFs are
expected to continue growing at a 3% rate after Year 5. The firm
has $25 million of market-value debt, but it has no preferred stock
or any other outstanding claims. There are 19 million shares
outstanding. Also, the firm has zero...

Kale Inc. forecasts the free cash flows (in millions) shown
below. Assume the firm has zero non-operating assets. If the
weighted average cost of capital is 10.0% and FCF is expected to
grow at a rate of 5.0% after Year 2, then what is the firm’s total
corporate value (in millions)? Do not round intermediate
calculations.
Year
1
2
Free Cash flow
$50
$100
a. $1,945
b. $1,665
c. $1,295
d. $1,864
e. $2,045

Hadley Inc. forecasts the year-end free cash flows (in millions)
shown below. Year 1 2 3 4 5 FCF -$22.95 $37.9 $43 $51.2 $55.2 The
weighted average cost of capital is 12%, and the FCFs are expected
to continue growing at a 4% rate after Year 5. The firm has $26
million of market-value debt, but it has no preferred stock or any
other outstanding claims. There are 18 million shares outstanding.
What is the value of the stock price...

Quantitative Problem 2: Hadley Inc. forecasts
the year-end free cash flows (in millions) shown below.
Year
1
2
3
4
5
FCF
-$22.06
$38.7
$43.5
$51.9
$55.3
The weighted average cost of capital is 10%, and the FCFs are
expected to continue growing at a 3% rate after Year 5. The firm
has $24 million of market-value debt, but it has no preferred stock
or any other outstanding claims. There are 21 million shares
outstanding. What is the value of...

Ryan Enterprises forecasts the free cash flows (in millions)
shown below. The weighted average cost of capital is 13.0%, and the
FCFs are expected to continue growing at a 5.0% rate after Year 3.
What is the firm's total corporate value, in millions?
Year
1
2
3
FCF
−$15.0
$10.0
$40.0
a.
$386.13
b.
$314.51
c.
$348.48
d.
$366.82
e.
$331.06

A company forecasts its free cash flows (in millions) as shown
below. If the company’s weighted average cost of capital is 10% and
the free cash flows are expected to grow at a rate of 3% after Year
2, what is the company’s total corporate value, in millions?
Year
1
2
Free cash flow
-$50
$100

The free cash flows (in millions) shown below are forecast by
Simmons Inc. Year: 1 2 3 Free cash flow: -$25 $50 $55 respectively.
If the weighted average cost of capital is 12% and the free cash
flows are expected to continue growing at the same rate after Year
3 as from Year 2 to Year 3, what is the Year 0 value of operations,
in millions? The balance sheet shows $25 million of short-term
investments that are unrelated to...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 17 minutes ago

asked 57 minutes ago

asked 58 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago