(This question has two parts.)It is 2022. You are investigating the possibility of making an equity investment in Walkerville Woodworking Inc., a firm that specializes in producing antique-style furniture with a modern twist. Your research hasrevealed the following information:• Walkerville has $8 million in excess cash and $4.5 million in debt.• The company is expected to have free cash flow of $28 million in 2023 and $35 million in 2024.• Beyond 2024, free cash flow is expected to grow at a constant rate of 2% per year forever.• Walkerville's weighted average cost of capital (WACC) is 11% and it has 9 million shares outstanding.Question AxWhat is the current enterprise value of Walkerville Woodworking given the above assumptions?OA. $375.58 millionOB. $349 14 millionOC. $4141 millionOD. $379.08 millionOE. $340.86 millionQuestion BWhat should be the price of one share of Walkerville stock?OA. $46.40OB. $41.34OC. $42.12

Terminal value of firm at year 2 (TV)= FCF2*(1+g)/(WACC - g) = 35*1.02/(0.11-0.02)= 396.6666667

Answered: It is 2022. You are investigating the…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter4: Financial Planning And Forecasting

Section: Chapter Questions

Problem 6P

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