Conundrum Mining is expected to generate the following free cash flows over the next four years, after which they are expected to grow at a rate of 5% per year. If the weighted average cost of capital is 12% and Conundrum has cash of $80 million, debt of $60 million, and 30 million shares outstanding, what is Conundrum's expected current share price? Round to the nearest cent. Year 1 2 3 4 Free Cash Flow $12 million $18 million $22 million $26 million
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- Universal Air forecasts growth of 8% for the next six years and 4% thereafter. Given last year's free cash flow was $10 million, what is its horizon value if the company's cost of capital is 12%? Following the textbook assumption, we have the horizon time defined as the year prior to settling down to the long run trend. Thus the horizon time is year 5. $198.36 million. $167.20 million $267.60 million $0Year Free cash flow to the firm Conundrum Mining is expected to generate the above free cash flows over the next four years, after which they are expected to grow at a rate of 3% per year. If the weighted average cost of capital is 15% and Conundrum has cash of $85 million, debt of $65 million, and 30 million shares outstanding, what is Conundrum's expected current share price? a. $6.16 b. $6.99 1 2 3 4 $15 million $20 million $25 million $30 million c. $6.53 d. $7.63Next year's free cash flows for a target firm are expected to be $1,835,000, with constant growth of 3% per year for the foreseeable future. The firm's WACC is $16% and current assets are valued at $840,000, with current liabilities estimated at $756,000. Long term debt has a market value of $8.5 million and the firm has outstanding preferred stock worth $900,000. If there are 250,000 common shares outstanding, what is the estimated market value of the firm's stock? Select one: $5,699,385 O $3,575,000 O $4,715,000 O $14,115,385 O $4,799,385
- 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 $1,212Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: Year 1 2 3 4 5 FCF ($ 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.)Kollo Enterprises has a beta of 0.80, the real risk-free rate is 2.20%, investors expect a 3.00% future inflation rate, and the market risk premium is 4.70%. What is Kollo's required rate of return? Do not round your intermediate calculations. a. 8.86% O b. 8.96% O c. 7.92% d. 8.36% O e. 6.76%
- More on the corporate valuation model Globex Corp. is expected to generate a free cash flow (FCF) of $2,020.00 million this year (FCF₁ = $2,020.00 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 Globex Corp.’s weighted average cost of capital (WACC) is 7.38%, what is the current total firm value of Globex Corp.? (Note: Round all intermediate calculations to two decimal places.) $6,344.09 million $67,122.55 million $66,519.07 million $55,432.56 million Globex Corp.’s debt has a market value of $41,574 million, and Globex Corp. has no preferred stock. If Globex Corp. has 300 million shares of common stock outstanding, what is Globex Corp.’s estimated intrinsic value per share of common stock? (Note: Round all…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…Kinkead Inc. forecasts that its free cash flow in the coming year, i.e., at t = 1, will be -$18 million, but its FCF at t = 2 will be $40 million. After Year 2, FCF is expected to grow at a constant rate of 5% forever. If the weighted average cost of capital is 14%, what is the firm's value of operations, in millions? Year: 1 2 Free cash flow: ($18) $40 (Round your answer to 2 decimal places.)
- Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: After that, the free cash flows are expected to grow at the industry average of 4.3% per year. Using the discounted free cash flow model and a weighted average cost of capital of 14.3%: a. Estimate the enterprise value of Heavy Metal. b. If Heavy Metal has no excess cash, debt of $291 million, and 35 million shares outstanding, estimate its share price.Company Z forecasts a positive Free Cash Flow for the coming year, with FCF1 = $20,000,000, and it expects a growth rate of 20% for the next two years. After Year 3, FCF is expected to grow at a constant rate of 5% forever. The Weighted Average Cost of Capital (WACC) is 9.00%, and the company has $150,000,000 of long-term debt (the remainder is comprised of common equity) and 10.0 million shares of common stock outstanding. What is the firm's estimated intrinsic value per share of common stock?Company Z forecasts a positive Free Cash Flow for the coming year, with FCF1 = $20,000,000, and it expects a growth rate of 20% for the next two years. After Year 3, FCF is expected to grow at a constant rate of 5% forever. The Weighted Average Cost of Capital (WACC) is 9.00%, and the company has $150,000,000 of long-term debt (the remainder is comprised of common equity) and 10.0 million shares of common stock outstanding. What is the firm's estimated intrinsic value per share of common stock? Group of answer choices 64.46 49.46 67.88 54.40 61.82