The question is att You are valuing a company at year end 2022 that has a target capital structure of 30% equity and 70% debt. The estimated cost ofequity is 16% and the net cost of debt is 8%, respectively. The estimated stream of free cash flow to the firm (FCF) is:Values is £2023 2024O a.O b.FCFO c.202210 000 11 230 12 560The expected nominal growth rate of FCF in perpetuity is 2.05%. At year end 2022 the estimated level of interest-bearing debt, cash,minorities, and financial investments are £10000, £9000, £4000, and £6000, respectively. The current market capitalization of thecompany is £ 160000. Your investment recommendation is:Buy, as the estimated year end 2022 equity value is £183417Sell, as the estimated year end 2022 equity value is £1532932025Sell, as the estimated year end 2022 equity value is £15903713 240202614 350

Particulars Values Year FCF Weight of debt 70% 2022 £ 10,000.00 Weight of equity 30% 2023…

Answered: You are valuing a company at year end…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A company forecasts a free cash flow of $55 million in Year 3, i.e., at t = 3, and it expects FCF to grow at a constant rate of 5.5% thereafter. If the weighted average cost of capital (WACC) is 10.0% and the cost of equity is 15.0%, then what is the horizon, or continuing, value in millions at t = 3? Group of answer choices $1,083 $1,148 $1,289 $1,186 $1,212
It is estimated that the free cash flows to equity (FCFE) from 2023 will be as 2023 2,800 TL 2024 3.300 TL 2025 5,000 TL 2026 5.700 TL If FCFE's is predicted to grow by 10% forever from 2026 and the cost of equity is 15%, what will be the value of the company's equity by 2022?
The firm forecasts a free cash flow of ₱ 41 million in Year 3, i.e., at t = 3, and it expects FCF to grow at a constant rate of 5% thereafter. If the weighted average cost of capital is 11% and the cost of equity is 15%, what is the horizon value, in millions at t = 3? a. ₱ 840 b. ₱ 717c. ₱ 883 d. ₱ 834
Assume your organization wishes to make a Php 200,000 investment with a private equity firm in 2021. Taking into account all of the risks, the current discount rate is 12%, and the revenue stream/dividends are as follows: 2022 50002023 60002024 70002025 80002026 90002027 100002028 11000 Determine the following:a. NPV for the period 2022 through 2028;b. Total NPV using manual computation;c. Total NPV using the Excel function; andd. IRR rate.
Assume today is 15 Jan 2020. You t e the following information regarding Salalah Ceramics 31 Dec 2019 31 Dec 2020 31 Dec 2021 31 Dec 2022 Cash Flow from 12000 Operations Cash Investment 7600 Cash flow from operations will grow by 10% every year up to 2022 and cash investment will grow by 20% every year up to 2022. FCF growth after 2022 will be 5% and required return is 12%. Assuming net debt is 7000 1. What is the firm's enterprise value 2. What is the firm's value of equity
Net Income for Company A is $200,000 in 2014, $300,000 in 2015, $400,000 in 2016, $500,000 in 2017, and $600,000 in 2018. The expected growth for all years after 2018 is 5%, the 90-Day T-Bill Rate is 20%, and the appropriate percentage above risk-free rate is 12%. Using this information, what is Net Present Value? A. 412,020.21 B. 812,020.21
Assume your organization wishes to make a Php 200,000 investment with a private equity firm in 2021. Taking into account all of the risks, the current discount rate is 12%, and the revenue stream/dividends are as follows: 2022 50002023 60002024 70002025 80002026 90002027 100002028 11000 Determine the following: DO IT IN EXCELa. NPV for the period 2022 through 2028;b. Total NPV using manual computation;c. Total NPV using the Excel function; andd. IRR rate.
You are evaluating a prospective LBO investment and determine that the Year 5 free cash flow (FCF) estimate is $850 million. Additionally, based on related work you estimate that the appropriate discount rate is 8.5% and the long term growth rate is 3.5%. Based on the perpetuity growth method, the Terminal Value of the company is _________ in Year Group of answer choices a. $17.6 bn, year 5 b. $17.0 bn, year 6 c. $10.0 bn, year 5 d. $17.6 bn, year 6
Current and projected free cash flows for Radell Global Operations are shown below. Actual Projected 2019 2020 2021 2022 Free cash flow $603.460 $664.140 $704.187 $746.440 (millions of dollars) Growth is expected to be constant after 2021, and the weighted average cost of capital is 10.8%. What is the horizon (continuing) value at 2022 if growth from 2021 remains constant? Do not round intermediate calculations. Enter your answer in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answer to the nearest whole number.
Use the below information to value the debt in a levered company with annual perpetual cash flows from assets that grow. The next cash flow will be generated in one year from now. Data on a Levered Firm with Perpetual Cash Flows Item abbreviation Value Item full name FFCF (millions) $30.5 Firm free cash flow (or Cash Flow from Assets) g 2% pa Growth rate of OFCF rD 3% pa Cost of debt rEL 6% pa Cost of levered equity D/VL 35% pa Debt to assets ratio, where the asset value includes tax shields tc 30% Corporate tax rate The current value of debt is a. 1157.5 b. 361.86 c. 405.12 d. 446.63 e. 672.03
6) Holly plc expects to receive annual cash flows of £75,000 per year in current price terms for a period of five years. Annual inflation is expected to be 4 percent and the cost of capital of the company is 10 percent in nominal terms. What is the present value of the expected cash flows (to the nearest £1,000)? A) £318,000 B) £306,000 C) £375,000 D) £296,000
Current and projected free cash flows for Radell Global Operations are shown below. Actual Projected 2019 2020 2021 2022 Free cash flow $601.740 $662.420 $702.467 $751.560 (millions of dollars) Growth is expected to be constant after 2021, and the weighted average cost of capital is 11.05%. What is the horizon (continuing) value at 2022 if growth from 2021 remains constant? Do not round intermediate calculations. Enter your answer in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answer to the nearest whole number. $ million

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