Blur Corp. has an expected net operating profit after taxes, EBIT(1-T), of $7,600 million in the coming year. In addition, the firm is expected to havenet capital expenditures of $1,140 million, and net operating working capital (NOWC) is expected to increase by $10 million. How much free cash flow(FCF) Is Blur Corp. expected to generate over the next year?○ $118,668 million$6,450 million○ $8,730 millionO $6,470 millionBlur Corp.'s FCFs are expected to grow at a constant rate of 4.62% per year in the future. The market value of Blur Corp.'s outstanding debt is$31,412 million, and its preferred stocks' value is $17,451 million. Blur Corp. has 150 million shares of common stock outstanding, and its weightedaverage cost of capital (WACC) equals 13.86%.TermTotal firm valueIntrinsic value of common equityIntrinsic value per shareValue (Millions)Using 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.

The objective of the question is to calculate the Free Cash Flow (FCF) of Blur Corp. for the next…

Answered: Blur Corp. has an expected net…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 20P

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Tropetech Inc. has an expected net operating profit after taxes, EBIT(1 – T), of $16,300 million in the coming year. In addition, the firm is expected to have net capital expenditures of $2,445 million, and net operating working capital (NOWC) is expected to increase by $50 million. How much free cash flow (FCF) is Tropetech Inc. expected to generate over the next year? $13,805 million $331,476 million $18,695 million $13,905 million
The projected cash flow for the next year for Minesuah Inc. is $125,000, and FCF is expected to grow at a constant rate of 6.8%. If the company's weighted average cost of capital is 15.7%, what is the value of its operations?
Shabbona Partners expects to have free cash flows of $38,950,000 next year, and free cash flows are expected to grow at a constant rate of 3% per year. If the firm's WACC is 9% per year, what is the value of Shabbona's operations?
Consider a company that is projected to generate revenues of $104 million next year. Analysts expect revenues to grow at a 4.6% annual rate for the following two years (until the end of year 3) and then at a stable rate of 2.5% in perpetuity. If the company is expected to have a gross margin of 75%, operating margin of 35%, net margin of 25%, tax rate of 16.4%, and reinvestment rate of 34%, what is its expected free cash in four years from today? Answer in millions, rounded to one decimal place
Sisyphus 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?
Victoria Enterprises expects earnings before interest and taxes (EBIT) next year of $1.6 million. Its depreciation and capital expenditures will both be $301,000, and it expects its capital expenditures to always equal its depreciation. Its working capital will increase by $47,000 over the next year. Its tax rate is 30%. If its WACC is 8% and its FCFs are expected to increase at 5% per year in perpetuity, what is its enterprise value?
Pearl Corp. is expected to have an EBIT of $2,900,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $160,000, $130,000, and $170,000, respectively. All are expected to grow at 19 percent per year for four years. The company currently has $15,000,000 in debt and 1,300,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3 percent indefinitely. The company’s WACC is 8.5 percent and the tax rate is 21 percent. What is the price per share of the company's stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Franktown Motors is expected to have an EBIT of $2.2 million next year. Depreciation, the increase in net working capital, and capital spending are expected to be $158,000, $92,000, and $114,000, respectively. All are expected to grow at 15 percent per year for four years. The firm currently has $12 million in debt and 750,000 shares outstanding. After year 5, the adjusted cash flow from assets is expected to grow at 2.5 percent indefinitely. The company’s WACC is 8.7 percent and the tax rate is 34 percent. What is the price per share of the company’s stock? $27.82 $29.34 $22.07 $26.12 $16.47
You expect ATM Corporation to generate the following free cash flows over the next five years: Year 1 2 3 4 5 FCF ($ millions) 75 84 96 111 120 Beginning with year six, you estimate that ATMʹs free cash flows will grow at 6% per year and that ATMʹs weighted average cost of capital is 15%. The enterprise value of ATM corporation is closest to: A. $1017.66 million B. $314.98 million C. $1413.33 million D. $702.67 million
The MoMi Corporation’s cash flow from operations before interest and taxes was $5.4 million in the year just ended, and it expects that this will grow by 5% per year forever. To make this happen, the firm will have to invest an amount equal to 17% of pretax cash flow each year. The tax rate is 21%. Depreciation was $370,000 in the year just ended and is expected to grow at the same rate as the operating cash flow. The appropriate market capitalization rate for the unleveraged cash flow is 10% per year, and the firm currently has debt of $7.2 million outstanding. Use the free cash flow approach to value the firm’s equity. (Round answer to nearest whole number. Enter your answer in dollars not in millions.)
The Seattle corporation has been presented with an investment opportunity that will yield cash flow of $30,000 per year in Years 1 through 4, $35,000 per year in Years 5 through 9, and $40,000 in Year 10. This investment will cost the firm $150,000 today, and the firm's cost of capital is 10 percent. Assume cash flows occur evenly during the year, 1/365th each day. What is the payback period for this investment?
The MoMi Corporation’s cash flow from operations before interest and taxes was $3.4 million in the year just ended, and it expects that this will grow by 5% per year forever. To make this happen, the firm will have to invest an amount equal to 16% of pretax cash flow each year. The tax rate is 21%. Depreciation was $400,000 in the year just ended and is expected to grow at the same rate as the operating cash flow. The appropriate market capitalization rate for the unleveraged cash flow is 12% per year, and the firm currently has debt of $7 million outstanding. Use the free cash flow approach to calculate the value of the firm and the firm’s equity

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