Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: (Click on the following icon in order to copy its contents into a spreadsheet.) Year FCF ($ millions) 1 53.5 2 66.1 3 78.8 4 75.4 a. Estimate the enterprise value of Heavy Metal. The enterprise value will be $ 721.06 million. (Round to two decimal places.) 5 81.2 After that, the free cash flows are expected to grow at the industry average of 3.7% per year. Using the discounted free cash flow model and a weighted average cost of capital of 13.6%: a. Estimate the enterprise value of Heavy Metal. b. If Heavy Metal has no excess cash, debt of $308 million, and 41 million shares outstanding, estimate its share price.

Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: (Click on the following icon in order to copy its contents into a spreadsheet.) Year FCF ($ millions) 1 53.5 2 66.1 3 78.8 4 75.4 a. Estimate the enterprise value of Heavy Metal. The enterprise value will be $ 721.06 million. (Round to two decimal places.) 5 81.2 After that, the free cash flows are expected to grow at the industry average of 3.7% per year. Using the discounted free cash flow model and a weighted average cost of capital of 13.6%: a. Estimate the enterprise value of Heavy Metal. b. If Heavy Metal has no excess cash, debt of $308 million, and 41 million shares outstanding, estimate its share price.

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter21: Dynamic Capital Structures And Corporate Valuation

Section: Chapter Questions

Problem 9P

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Assume that an investment of 100,000 produces a net cash flow of 60,000 per year for two years. The discount factor for year 1 is 0.89 and for year 2 is 0.80. The NPV is a. 0 b. 6,800 c. 1,400 d. (4,000)
Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: (Click on the following icon in order to copy its contents into a spreadsheet.) Year FCF ($ million) 1 52.4 2 67.9 3 79.3 4 73.1 5 81.9 After that, the free cash flows are expected to grow at the industry average of 4.1% per year. Using the discounted free cash flow model and a weighted average cost of capital of 14.7%: a. Estimate the enterprise value of Heavy Metal. b. If Heavy Metal has no excess cash, debt of $320 million, and 44 million shares outstanding, estimate its share price.
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Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: Year 1 2 3 4 5 FCF ($ 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.)
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