The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach are someexamples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you've done in previousproblems, but it focuses on a firm's free cash flows (FCFS) instead of its dividends. Some firms don't pay dividends, or their dividendsare difficult to forecast. For that reason, some analysts use the corporate valuation model.Spandust Industries Inc. has an expected net operating profit after taxes, EBIT(1 - T), of $14,600 million in the coming year. In addition, the firm isexpected to have net capital expenditures of $2,190 million, and net operating working capital (NOWC) is expected to increase by $10 million. Howmuch free cash flow (FCF) is Spandust Industries Inc. expected to generate over the next year?O $12,420 million$16,780 million$12,400 millionO $297,740 millionSpandust Industries Inc.'s FCFS are expected to grow at a constant rate of 3.54% per year in the future. The market value of Spandust IndustriesInc.'s outstanding debt is $78,814 million, and its preferred stocks' value is $43,785 million. Spandust Industries Inc. has 150 million shares ofcommon stock outstanding, and its weighted average cost of capital (WACC) equals 10.62%.TermValue (Millions)Total firm valueIntrinsic value of common equityIntrinsic value per shareUsing the preceding information and the FCF you calculated in the previous question, calculate the appropriate values in this table. Assume the firmhas no nonoperating assets.

EBIT(1-T) 14600 Net capital exp 2190 N.O.W.C 10 F.C.F 12400 F.C.F=E.B.I.T(1-T)-Net capital…

The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you've done in previous problems, but it focuses on a firm's free cash flows (FCFS) instead of its dividends. Some firms don't pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model. pandust Industries Inc. has an expected net operating profit after taxes, EBIT(1 - T), of $14,500 million in the coming year. In addition, the firm is xpected to have net capital expenditures of $2,190 million, and net operating working capital (NOWC) is expected to increase by $10 million. How nuch free cash flow (FCF) is Spandust Industries Inc. expected to generate over the next year? O $12,420 million O $16,780 million O $12,400 million

The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you've done in previous problems, but it focuses on a firm's free cash flows (FCFS) instead of its dividends. Some firms don't pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model. pandust Industries Inc. has an expected net operating profit after taxes, EBIT(1 - T), of $14,500 million in the coming year. In addition, the firm is xpected to have net capital expenditures of $2,190 million, and net operating working capital (NOWC) is expected to increase by $10 million. How nuch free cash flow (FCF) is Spandust Industries Inc. expected to generate over the next year? O $12,420 million O $16,780 million O $12,400 million

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter5: Risk Analysis

Section: Chapter Questions

Problem 2QE

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The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you’ve done in previous problems, but it focuses on a firm’s free cash flows (FCFs) instead of its dividends. Some firms don’t pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model. Charles Underwood Agency Inc. has an expected net operating profit after taxes, EBIT(1 – T), of $17,400 million in the coming year. In addition, the firm is expected to have net capital expenditures of $2,610 million, and net operating working capital (NOWC) is expected to increase by $30 million. How much free cash flow (FCF) is Charles Underwood Agency Inc. expected to generate over the next year? $14,820 million $19,980 million $321,693 million $14,760 million…
The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you’ve done in previous problems, but it focuses on a firm’s free cash flows (FCFs) instead of its dividends. Some firms don’t pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model. Tropetech Inc. has an expected net operating profit after taxes, EBIT(1 – T), of $2,400 million in the coming year. In addition, the firm is expected to have net capital expenditures of $360 million, and net operating working capital (NOWC) is expected to increase by $45 million. How much free cash flow (FCF) is Tropetech Inc. expected to generate over the next year? $43,481 million $2,085 million $2,715 million $1,995 million Tropetech Inc.’s FCFs are…
The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you've done in previous problems, but it focuses on a firm's free cash flows (FCFS) instead of its dividends. Some firms don't pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model. Tropetech Inc. has an expected net operating profit after taxes, EBIT(1-T), of $2,400 million in the coming year. In addition, the firm is expected to have net capital expenditures of $360 million, and net operating working capital (NOWC) is expected to increase by $45 million. How much free cash flow ( FCF) is Tropetech Inc. expected to generate over the next year? $2,085 million $2,715 million $43,481 million $1,995 million Tropetech Inc.'s FCFs are expected to grow at a constant rate of 3.90%…
Corporate valuation model The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you’ve done in previous problems, but it focuses on a firm’s free cash flows (FCFs) instead of its dividends. Some firms don’t pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model. Tropetech Inc. has an expected net operating profit after taxes, EBIT(1 – T), of $2,400 million in the coming year. In addition, the firm is expected to have net capital expenditures of $360 million, and net operating working capital (NOWC) is expected to increase by $45 million. How much free cash flow (FCF) is Tropetech Inc. expected to generate over the next year? $1,995 million $2,715 million $43,481 million $2,085 million…
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A company’s dividend policy can also be affected by factors internal to the organization and by the external (macroeconomic) environment in which the business operates. In the table that follows, identify which factors, in general, tend to favor high or low dividend payout ratios. Factor Favors a High Payout Favors a Low Payout A company has a large retained earnings balance on its balance sheet but has very little cash and almost no other liquid assets. A company has an established credit line that it can access when it needs an external source of funding. A closely held firm has a majority of its shareholders in high marginal tax brackets. Each factor higher or lower payout Having the ability to accelerate or delay projects makes it easier or harder for a firm to adhere to a stable dividend policy. If management is concerned with keeping control of the company, it will be likely to retain more or less earnings than…