Question

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

Answer #1

At the end of the year 2010 the CL Corporation had operating
free cash flow (OFCF) of $300,000 and shares outstanding of
100,000. Total debt is currently $10,000,000. The company projects
the following annual growth rates in OFCF
Year
Growth Rate
2011
25%
2012
20%
2013
15%
2014
10%
2015
12%
2016
14%
2017
16%
2018
18%
From year 2019 onward growth in OFCF is expected to remain
constant at 5% per year. The stock has a beta of 1.1...

1. Suppose the following data
represents total revenues (in $ millions) for a mining
company.
Year
Revenue
4-Year Moving
Average
4 Weighted Moving Average
Weights 4,3,2,1
Exponential smoothing
α = 0.6
2010
75
2011
81
2012
74
2013
79
2014
69
2015
92
2016
73
2017
85
2018
90
2019
73
2020
Forecast
Use 2 decimal
places,
Compute the 4-year moving averages and forecast the revenue for
2020. ( 4 marks)
Compute the 4-year weighted moving averages...

Sales for the La Parisienne Cosmetics Company (in $ millions)
are as follows:
Year
Sales ($ millions)
Year
Sales ($ Millions)
Year
Sales ($ Milions
1996
2.3
2003
4.5
2010
4.5
1997
2.9
2004
4.7
2011
4.9
1998
3.4
2005
5.0
2012
5.2
1999
4.5
2006
5.2
2013
5.5
2000
3.4
2007
5.5
2014
5.8
2001
4.0
2008
4.3
2002
4.2
2009
4.4
(a) Develop a three-year moving average.
(b) Develop a four-year moving average.
(c) Develop a five-year moving...

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...

The free cash flows (in millions) shown below are forecast by
Parker & Sons. If the weighted average cost of capital is 11%
and FCF is expected to grow at a rate of 5% after Year 2, what is
the Year 0 value of operations, in millions? Assume that the ROIC
is expected to remain constant in Year 2 and beyond (and do not
make any half-year adjustments).
Year 1 Cash Flow -$50 Year 2 Cash Flow $100

During the coming year, Gold & Gold wants to increase its
free cash flow (FCF) by $220 million, which should result in a
higher EVA and stock price. The CFO has made these projections for
the upcoming year: EBIT is projected to equal $850 million. Gross
capital expenditures are expected to total to $360 million versus
depreciation of $120 million, so its net capital expenditures
should total $240 million. The tax rate is 40%. There will be no
changes in...

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...

A company is projected to have a free cash flow of $343 million
next year, growing at a 5.6% rate until the end of year 3. After
that, cash flows are expected to grow at a stable rate of 2.2%. The
company's cost of capital is 12.9%. The company owes $71 million to
lenders and has $17 million in cash. If it has 221 million shares
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The following information is taken from Procter & Gamble's
2012 annual report:
(in millions)
2012
2011
2010
Income statement
Net sales
$84,680
$82,104
$78,567
Net earnings
10,756
11,797
12,736
Balance sheet
Shareholders' equity
64,439
68,640
Statement of cash flow
Dividends to shareholders
6,139
5,767
5,458
Calculate the company's actual and sustainable rate of growth in
sales for 2012 and 2013

During the coming year, Gold & Gold wants to increase its
free cash flow (FCF) by $200 million, which should result in a
higher EVA and stock price. The CFO has made these projections for
the upcoming year: EBIT is projected to equal $850 million. Gross
capital expenditures are expected to total to $360 million versus
depreciation of $120 million, so its net capital expenditures
should total $240 million. The tax rate is 40%. There will be no
changes in...

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