Question

You are trying to calculate the enterprise value of DCB Corp using a free cash flow...

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 include the $-sign in your answer).

Forecasts for Year 1 (in $ millions)
Sales 142
Cost of sales 51
Selling, general and administrative expenses 6
Depreciation 25
Increase in Net Working Capital 5
Capital expenditures 36
Marginal corporate tax rate 20%
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
the Enterprise Value of a firm (using the DCF valuation methodology) is arrived at by discounting...
the Enterprise Value of a firm (using the DCF valuation methodology) is arrived at by discounting the after-tax free Cash & Capital Flows available to the firm by the Weighted Average Cost of Capital (WACC). True or False  
Extensive Enterprise Inc. is expected to generate a free cash flow (FCF) of $7,295.00 million this...
Extensive Enterprise Inc. is expected to generate a free cash flow (FCF) of $7,295.00 million this year (FCF1FCF1 = $7,295.00 million), and the FCF is expected to grow at a rate of 26.20% over the following two years (FCF2FCF2 and FCF3FCF3). After the third year, however, the FCF is expected to grow at a constant rate of 4.26% per year, which will last forever (FCF4FCF4). If Extensive Enterprise Inc.’s weighted average cost of capital (WACC) is 12.78%, what is the...
Extensive Enterprise Inc. is expected to generate a free cash flow (FCF) of $2,450.00 million this...
Extensive Enterprise Inc. is expected to generate a free cash flow (FCF) of $2,450.00 million this year (FCF₁ = $2,450.00 million), and the FCF is expected to grow at a rate of 21.40% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 2.82% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Extensive Enterprise Inc.’s weighted average cost of...
Please calculate the price per share using the free cash flow model given the following: You...
Please calculate the price per share using the free cash flow model given the following: You are analyzing Ola Enterprises, a small manufacturing firm. The firm does not pay a dividend, but they've been in existence for 7 years now. The future growth rate is estimated to be 4%. Their weighted average cost of capital is 7.50% and the company has $700,000 in debt. Additionally, the company has 100,000 outstanding shares of common stock. There annual free cash flows are...
Praxis Corp. is expected to generate a free cash flow (FCF) of $7,890.00 million this year...
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%,...
Go Corp. expects free cash flows of $1,000,000, $1,100,000, $1,200,000, $1,300,000, $1,400,000, in years 1,2 3,4,...
Go Corp. expects free cash flows of $1,000,000, $1,100,000, $1,200,000, $1,300,000, $1,400,000, in years 1,2 3,4, 5 respectively. In addition, Go has a continuing value of $2,500,000 at the end of year 5 and a cost of capital of 9%. Assuming year end cash flows, please open an excel spreadsheet enter the numbers above (in year 5 – you will have to sum the cash flow and the continuing value). Then use the NPV function to bring these yearly cash...
Free cash flow forecasts for the next four years are $50,000, $90,000, $70,000, and $100,000. There...
Free cash flow forecasts for the next four years are $50,000, $90,000, $70,000, and $100,000. There is a terminal value of $800,000. If the weighted average cost of capital is 12% then what is the value of the firm using the absolute valuation method if the terminal value of the firm (at the end of four years from today) is estimated to
The following is a five year forecast for the company Free Cash Flow (in millions) 2010:...
The following is a five year forecast for the company Free Cash Flow (in millions) 2010: -10 2011: 5 2012: 20 2013: 40 2014: 60 After 2014, earnings before interest and tax will remain constant at $69 million, depreciation will equal capital expenditures each year, and working capital will increase by $2 million. The company's WACC is 12.9% and its tax rate is 12%. Estimate the market value of the company at the end of 2009. Please show work
A company forecasts its free cash flows (in millions) as shown below. If the company’s weighted...
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
PureFood Inc forecasts that its free cash flow in the coming year, i.e., at t=1, will...
PureFood Inc forecasts that its free cash flow in the coming year, i.e., at t=1, will be $10 million, but its FCF at t=2 will be $20 million. After Year 2 , FCF is expected to grow at a constant rate of 5% forever. If the weighted average cost of capital is 14%, what is the firm’s value of operations, in millions?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT