11. More on the corporate valuation modelPraxis Corp. is expected to generate a free cash flow (FCF) of $11,375.00 million this year (FCF₁ = $11,375.00 million), and the FCF is expected togrow at a rate of 25.00% over the following two years (FCF2 and FCF3). After the third year, however, the FCF is expected to grow at a constant rateof 3.90% per year, which will last forever (FCF4). Assume the firm has no nonoperating assets. If Praxis Corp.'s weighted average cost of capital(WACC) is 11.70%, what is the current total firm value of Praxis Corp.? (Note: Round all intermediate calculations to two decimal places.)$271,083.87 million$204,208.90 million$245,050.68 million$34,332.59 millionPraxis Corp.'s debt has a market value of $153,157 million, and Praxis Corp. has no preferred stock. If Praxis Corp. has 225 million shares of commonstock outstanding, what is Praxis Corp.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to twodecimal places.)$680.70$226.90$225.90$249.59

Formula to calculate Horizon value: Horizon value of firm = FCF * (1+g)/ (R-g) Where, FCF = Free…

Answered: 11. More on the corporate valuation…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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11. More on the corporate valuation model Ankh-Sto Associates Co. is expected to generate a free cash flow (FCF) of $7,890.00 million this year (FCF, = $7,890.00 million), and the FCF is expected to grow at a rate of 19.00% over the following two years (FCF, and FCF). After the third year, however, the FCF is expected to grow at a constant rate of 2.10% per year, which will last forever (FCF). Assume the firm has no nonoperating assets. If Ankh-Sto Associates Co.'s weighted average cost of capital (WACC) is 6.30%, what is the current total firm value of Ankh-Sto Associates Co.? (Note: Round all intermediate calculations to two decimal places.) O $301,389.46 million $25,033.45 million $296,644.40 million O $251,157.88 million Ankh-Sto Associates Co.'s debt has a market value of $188,368 million, and Ankh-Sto Associates Co. has no preferred stock. If Ankh-Sto Associates Co. has 225 million shares of common stock outstanding, what is Ankh-Sto Associates Co.'s estimated intrinsic value per…
More on the corporate valuation model Lex Corp. is expected to generate a free cash flow (FCF) of $10,150.00 million this year (FCF₁ = $10,150.00 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). Assume the firm has no nonoperating assets. If Lex Corp.’s weighted average cost of capital (WACC) is 7.38%, what is the current total firm value of Lex Corp.? (Note: Round all intermediate calculations to two decimal places.) $337,274.05 million $31,877.51 million $334,241.74 million $278,534.78 million Lex Corp.’s debt has a market value of $208,901 million, and Lex Corp. has no preferred stock. If Lex Corp. has 750 million shares of common stock outstanding, what is Lex Corp.’s estimated intrinsic value per share of common stock? (Note: Round all intermediate…
11. More on the corporate valuation model Praxis Corp. is expected to generate a free cash flow (FCF) of $2,285.00 million this year (FCF₁ = $2,285.00 million), and the FCF is expected to grow at a rate of 23.80% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 3.54% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Praxis Corp.’s weighted average cost of capital (WACC) is 10.62%, what is the current total firm value of Praxis Corp.? (Note: Round all intermediate calculations to two decimal places.) a. $58,180.09 million b. $6,964.55 million c. $53,760.19 million d. $44,800.16 million Praxis Corp.’s debt has a market value of $33,600 million, and Praxis Corp. has no preferred stock. If Praxis Corp. has 150 million shares of common stock outstanding, what is Praxis Corp.’s estimated intrinsic value per share of common stock?…
11. More on the corporate valuation model Omni Consumer Products Co. is expected to generate a free cash flow (FCF) of $9,050.00 million this year (FCF₁ = $9,050.00 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 Omni Consumer Products Co.’s weighted average cost of capital (WACC) is 8.46%, what is the current total firm value of Omni Consumer Products Co.? (Note: Round all intermediate calculations to two decimal places.) $28,137.56 million $262,460.16 million $271,293.23 million $218,716.80 million Omni Consumer Products Co.’s debt has a market value of $164,038 million, and Omni Consumer Products Co. has no preferred stock. If Omni Consumer Products Co. has 675 million shares of common stock outstanding, what is…
ory 5. More on the corporate valuation model Omni Consumer Products Co. is expected to generate a free cash flow (FCF) of $14.180.00 million this year (FCFS=$14,180.00 million), and the FOF is expected to grow at a rate of 26.20% over the following two years (FCF and FCFs). After the third year however, the FCF is expected to grow at a constant rate of 4.26% per year, which will last forever (FCF4). Assume the firm has no nonoperating assets. If Omni Consumer Products Co.'s weighted average cost of capital (WACC) is 12.78%, what is the current total firm value of Omni Consumer Products Co.? (Note: Round all intermediate calculations to tvo decimal places.) O$235.039.29 milion O$282,047.15 million O $42.385.81 million. O$318.744.50 million Omni Consumer Products Co.'s debt has a market value of $176.279 million, and Omni Consumer Products Co. has no preferred stock. If Omni Consumer Products Co. has 225 million shares of common stock outstanding, what is Omni Consumer Products Co.'s…
All parts are under 1 questions and per your policy you can answer all parts to 1 question. 11. More on the corporate valuation model Qwerty Logistics Corp. is expected to generate a free cash flow (FCF) of $9,420.00 million this year (FCF₁ = $9,420.00 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). Assume the firm has no nonoperating assets. A. If Qwerty Logistics Corp.’s weighted average cost of capital (WACC) is 7.38%, what is the current total firm value of Qwerty Logistics Corp.? (Note: Round all intermediate calculations to two decimal places.) $310,202.70 million $29,584.83 million $313,016.94 million $258,502.25 million B. Qwerty Logistics Corp.’s debt has a market value of $193,877 million, and Qwerty Logistics Corp. has no preferred stock. If…
Value in Valuation, Inc. is assessing the value of two companies, Company A and Company B, which projects average net cashflows in the next five years of P4,000,000 and 3,000,000, respectively. The required rate of return is both 8%. Which of the following has the higher equity value and by how much? And assuming that Company A is being sold at P48,000,000 while Company B is being sold at P36,500,000, what should be Value in Valuation’s best recommendation among the following choices: 1. To buy Company A because the selling price is higher than its equity value 2. To buy Company A because it is being sold at a discount of P2,000,000 3. To buy Company B because the selling price is lower than its equity value 4. To buy Company B because it is being sold at a premium of P1,000,000
Gupta Corporation is undergoing a restructuring, and its free cash flows are expected to vary considerably during the next few years. However, the FCF is expected to be $85.00 million in Year 5, and the FCF growth rate is expected to be a constant 6.5% beyond that point. The weighted average cost of capital is 12.0%. What is the horizon (or continuing) value (in millions) at t = 5? a. $1,646 O b. $1,234 O c. $1,432 d. $1,662 O e. $2,041
ABC Company expects its free cash flows to vary considerably during the next few years. However, its FCF is expected to be $28 million in Year 5 (i.e., FCF at t=5), and the FCF growth rate is expected to be a constant 6.4% beyond that point. The company's WACC is 12.4%. What is the horizon value (in millions) in year 5 (i.e., t=5)? Do not discount the horizon value to Year 0. Round your answer to the nearest dollar. (Hint: Use the horizon value (HV) formula with a constant growth.) Group of answer choices $514 million $508 million $497 million $520 million $503 million
Praxis Corp. is expected to generate a free cash flow (FCF) of $5,670.00 million this year (FCF, = $5,670.00 million), and the FCF is expected to grow at a rate of 22.60% over the following two years (FCF, and FCF). After the third year, however, the FCF is expected to grow at a constant rate of 3.18% per year, which will last forever (FCF). Assume the firm has no nonoperating assets. If Praxis Corp.'s weighted average cost of capital (WACC) is 9.54%, what is the current total firm value of Praxis Corp.? (Note: Round all intermediate calculations to two decimal places.) $155,715.35 million O $17,453.56 million $122,645.86 million $147,175.03 million Praxis Corp.'s debt has a market value of $91,984 million, and Praxis Corp. has no preferred stock. If Praxis Corp. has 375 million shares of common stock outstanding, what is Praxis Corp.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $81.76 $80.76 $89.94 $245.29
A company is projected to generate revenues of $336 million and $406 million over the next two years. After that, the company is assumed to enter its terminal phase with steady growth. Given the following information, how much is each share worth today? Answer in dollars rounded to one decimal place. Forecasted operating margin: 35.4%. Forecasted tax rate: 22.2%. Forecasted reinvestment rate: 30%. Forecasted steady growth rate of free cash flow: 1.3% per year. Cost of capital: 13.2%. Debt: $40 million. Cash: $35 million. Shares outstanding: 12 million.
barnette Inc.'s free cash flows are expected to be unstable during the next few years while the company undergoes restructuring. However, FCF is expected to be $39.71 million in Year 5, i.e., FCF at t = 5 equals $39.71 million, and the FCF growth rate is expected to be constant at 4.75% beyond that point. If the weighted average cost of capital is 11%, what is the horizon value (in millions) at t = 5?

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