An analyst is trying to estimate the intrinsic value of Blue Co. that has a weighted average cost of capital at 10%. The estimated free cash flows for the company for the following years are: Year 1 P3,000 Year 2 P4,000 Year 3 P5,000 The analyst estimates that after three years, free cash flow will grow at a constant annual percentage of 6%. What is the total intrinsic value of the company's common stock if combined debt and preferred stock has a P25,000 market value? *
Q: Ivanhoe, Inc., is a mature firm that is growing at a constant rate of 5.62 percent per year. The…
A: Market value of company stock is present value of all future cash flows that is Calculated using…
Q: Arts and Crafts, Inc. will pay a dividend of $2 per share in 1 year. It sells at $40 a share, and…
A: The expected growth rate of the company’s dividend is 5%. Computation of expected growth rate:…
Q: What is the current value per share?
A: The current value per share means the price of share prevailing in the market. The discount rate is…
Q: a. Assuming the current market price of the stock reflects its intrinsic value as computed using the…
A: EPS are the earnings than an equity investor earns for buying shares of the company and for allowing…
Q: Analysts predict that Burks Corporation will have free cash flows (FCFs) of negative $20 million at…
A: WACC is 11% Net Debt is $30million Stocks outstanding is 3 milllion To Find: current price per…
Q: BIG TECH Inc. sells at $40 per share, and its latest 12-month earnings were $8 per share, of…
A:
Q: The CFO of Blue Co. has collected the following information related to the firm’s cost of capital to…
A: Equity in Capital Structure = 75% Debt in Capital Structure = 25% YTM = 8% Tax Rate = 40%
Q: An analyst uses a two-stage variable growth model to estimate the value of Old Maid Company's common…
A: Note: No intermediate rounding is done for calculation in the successive steps. a) Dividend for…
Q: A company is projected to have a free cash flow of $243 million next year, growing at a 5.6% rate…
A: Current stock price is the value to stocks at which it can be sold in the market today.
Q: Marshall Law firm expects to generate free-cash flows of $200,000 per year for the next five years.…
A: Given information: Cash flows generated amounted to $200,000 for 5 years Growth rate is 5% WACC is…
Q: A company is projected to have a free cash flow of $357 million next year, growing at a 4.4% rate…
A: Free cash flow in Year 1 (FCF1) = $357 million Free cash flow in Year 2 (FCF2) =$357*(1+4.4%)…
Q: Storico Co. just paid a dividend of $1.45 per share. The company will increase its dividend by 24…
A: D0 = $1.45;Year1 growth rate = g1 = 24%;Year 2 growth rate, g2 = g1 - 6% = 24% - 6% = 18%Year 3…
Q: Finance, Inc. has equity with a market value of $30 million and debt with a market value of $15…
A: Since you have posted a question with multiple sub-parts, we will solve the first three subparts for…
Q: You have been .asked to estimate the weighted average cost of capital (WACC) for Germina Corp., a…
A: The question is based on the concept of Financial Management.
Q: ABC currently produces annual free cash flows of 5 billion a year. The company has long-term debt of…
A: Enterprise value of a firm is calculated as Equity value plus debt minus cash as follows: Present…
Q: You are given the following information about a firm: Cost of equity is 10% Cash flow to…
A: The question is based on the concept of financial management.
Q: . HighGrowth Company has a stock price of $19. The firm will pay a dividend next year of $0.88, and…
A: Next dividend (D1) = 0.88 Current price (P0) = $19 Growth rate (G) = 4.1%
Q: Happy Time Inc. is expected to generate the following cash flows for the next year, as shown in the…
A: Debt is one of the form of loan taken by the business. Equity is also one of the source of financing…
Q: You have been assigned the task of using the corporate, or free cash flow, model to estimate Petry…
A: Intrinsic Value = Value of equity / no. of equity shareholders
Q: MacJolly Corporation is expecting a cash flow of P3,000,000 next year and it is expected to…
A: The value of the company refers to the present value of free cash flows that are expected to be…
Q: Alpha Corporation has average annual free cashflows to the equity holder and to the firm of…
A: Value of Equity is that money which was invested by the Equity share holder in the Company It will…
Q: Last year, National Co. has an Earnings per share of P8. Even though the firm will grow at rate of…
A: We need to use constant growth model to calculate the price of common stock. Common stock price…
Q: Suppose that the market value of a company’s 5.000.000 outstanding number of shares is estimated at…
A: Weighted average cost of capital is the expected rate of return that is expected from a company to…
Q: A company is forecasted to generate free cash flows of $29 million next year and $29 million the…
A: The total cash that a company has to pay off to its liabilities and dividend to its shareholders is…
Q: A financial analyst estimates that the current risk-free rate for NN company is 6.25 percent, the…
A: Gordon growth model provides the current price of a share if it has a constant growth till infinity
Q: nts company is expected to pay dividends that will grow at a 21% rate from year 1 to year 4, with…
A: Current intrinsic price of the stock is the discounted value of the future cashlows arising from…
Q: The analyst estimates that after three years the National Inc’s free cash flow will grow at a…
A: The value of company can be calculated as per the free cash flow valuation model
Q: The Notre dame Explorers company is expected to pay dividends that will grow at a 21% rate from year…
A:
Q: Heavy Metal Corporation is expected to generate the following free cash flows over the next five…
A: FCF1 = $54.9 million FCF2 = $67.5 million FCF3 = $78.3 million FCF4 = $76.5 million FCF5 = $82.3…
Q: Kosm Inc. forecasts a positive Free Cash Flow for the coming year, with FCF1 = $10,000,000, and it…
A: Formulas:
Q: HighGrowth Company has a stock price of $21. The firm will pay a dividend next year of $1.01, and…
A: Given: Stock Price(P0 )=$21Dividend paid next year (D1)=$1.01Expected growth rate of dividend…
Q: Sims Manufacturing is expected to generate $195 million in free cash flow next year, and FCF is…
A: In this problem, First, we will compute the present value of free cash flows which will b the firm…
Q: Anle Corporation has a current price of $13, is expected to pay a dividend of $2 in one year, and…
A: Answer: 1. Calculation of Anle's expected dividend yield: Formula, Expected dividend yield =…
Q: HighGrowth Company has a stock price of $18. The firm will pay a dividend next year of $1.15, and…
A: Stock price (P0) = $18 Next dividend (D1) = $1.15 Growth rate (g) = 3.5%
Q: Corcoran Inc. uses the Gordon Growth Model to estimate ks; its current stock price is $30; it…
A: a) Assumption: The after-tax cost of debt is assumed as 10%.
Q: Banco Industries expect sales to grow at a rapid rate over the next three years, but settle to án…
A: The stock price at the start of year 1 can be calculated as follows: Calculate the terminal value…
Q: Keraz Inc. has recently reported a Free Cash Flow (FCF) of $21.5 million. The CFO expects that FCF…
A: The question is based on the concept of valuation of project based on the constant growth model.…
Step by step
Solved in 2 steps
- Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1 and by 5% in Year 2. Its operating profitability ratio (OP) is 10%, and its capital requirement ratio (CR) is 80%? What are the projected sales in Years 1 and 2? What are the projected amounts of net operating profit after taxes (NOPAT) for Years 1 and 2? What are the projected amounts of total net operating capital (OpCap) for Years 1 and 2? What is the projected FCF for Year 2?HappyTunes Inc. forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 11.75%, the cost of equity is 19.25%, and the FCFs are expected to continue growing at a 5.25% rate after Year 5. Assuming that the ROIC is expected to remain constant in Year 5 and beyond, what is the Year O value of operations? Year: 1 2 3 4 5 Free cash flow: -$995 $15 $55 $80 $125 O-$310.32 million O $387.53 million O $139.31 million $445.46 million O-$176.72 milliAn analyst is trying to estimate the intrinsic value of VN Co. that has a weighted average cost of capital at 10%. The estimated free cash flows for the company for the following years are: · Year 1 P3,000 · Year 2 P4,000 · Year 3 P5,000 The analyst estimates that after three years, free cash flow will grow at a constant annual percentage of 6%. What is the total intrinsic value of the company’s common stock if combined debt and preferred stock has a P25,000 market value? A. 98,556 B. 109,339 C. 78,310 D. 84,339
- Kabab Co. is considering a $240,000 investment, which will provide net returns of $110,000, $160,000, and $220,000 in the second, third, and fourth years, respectively. What is the payback period? Round up to the next month Use the following table: Year Cash Outflow Cash Inflow Net Cash Flow Cumulative Cash FlowSisyphus Corp. has projected that their performance for the next five years results to the following: YEAR Revenue Cash Operating Expenses 1 50 30 2 55.00 33.00 3 60.50 36.30 4 66.55 39.93 5 73.21 43.92 Terminal value was assumed based on the growth rate of the cash flows. The annual Capital investment requirement is at P2 million. The income Tax rate is at 30%. The required rate of return for their business is 14%. Requirement: How much is the Free Cash Flow for years 1-5? How much is the Discounted Net Cash Flows to the Firm for years 1-5?The free cash flows (in millions) shown below are forecast by Simmons Inc. If the weighted average cost of capital is 13% 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? Year: 1 Free Cash Flow: -$20, Year 2 Free Cash Flow: $44, Year 3 Free Cah Flow: $47.
- Perez Company is considering an investment of $26,945 that provides net cash flows of $8,500 annually for four years.(a) What is the internal rate of return of this investment? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your present value factor to 4 decimals.)(b) The hurdle rate is 7%. Should the company invest in this project on the basis of internal rate of return?Perez Company is considering an investment of $26,945 that provides net cash flows of $8,500 annually for four years. (a) What is the internal rate of return of this investment? (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Round your present value factor to 4 decimals. (b) The hurdle rate is 7%. Should the company invest in this project on the basis of internal rate of return? Complete this question by entering your answers in the tabs below. Required A Required B What is the internal rate of return of this investment? Present value factor Internal rate of return %Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: Year 1 2 3 4 5 FCF ($ million) 51.1 69.2 78.8 76.4 80.1 After that, the free cash flows are expected to grow at the industry average of 3.9% per year. Using the discounted free cash flow model and a weighted average cost of capital of 13.5%: Estimate the enterprise value of Heavy Metal. (Round to two decimalplaces.) If Heavy Metal has no excess cash, debt of $285 million, and 43 million shares outstanding, estimate its share price. (Round to two decimalplaces.)
- Sisyphus Corp. has projected that their performance for the next five years results in the following: YEAR Revenue Cash Operating Expenses 1 50 30 2 55.00 33.00 3 60.50 36.30 4 66.55 39.93 5 73.21 43.92 Terminal value was assumed based on the growth rate of the cash flows. Annual Capital investment requirement is at P2 million. Income Tax rate is at 30%. The required rate or return for their business is 14%. Requirement: Compute for the growth rate How much is the Terminal Value? How much is the Free Cash Flow for years 1-5? How much is the Discounted Net Cash Flows to the Firm for years 1-5?Phosfranc Inc. is valuing the equity of a company using the free cash flow from equity, FCFE, approach and has estimated that the FCFE in the next three years will be $6.25, $7.70, and $8.36 million respectively. Beginning in year 4, the company expects the cash flows to increase at a rate of 4 percent per year for the indefinite future. It is estimated that the cost of equity is 12 percent. What is the value of equity in this company? (Do not round intermediate computations. Round final answer to the nearest million.) A) $77 million B) $95 million C) $109 million D) $60 millionThe free cash flows (in millions) shown below are forecast by Simmons Inc. If the weighted average cost of capital is 13% 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? Years 1 2 3 Free cash flow: Year 1- $-20, Year 2- $42, Year 3- $45