If you give me wrong answer, I will give you unhelpful rate Suppose Boyson Corporation's projected free cash flow for next yearis FCF1 = $150,000, and FCF is expected to grow at a constant rateof 6.5%.If the company's weighted average cost of capital is 11.5%, what isthe firm's total corporate value?a. $3,150,000b. $2,850,000c. $2,707,500d. $2,572,125e. $3,000,000

Step 1: Understanding the Problem:We're given:FCF1 (Free Cash Flow in year 1) = $150,000Growth rate…

Answered: Suppose Boyson Corporation's projected…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 1P: Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1...

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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?
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13. The firm's free cash flow during the just-ended year (t = 0) was P 100 million, and FCF is expected to grow at a constant rate of 5% in the future. If the weighted average cost of capital is 15%, what is the firm's value of operations, in millions? a. 948 d. 1,103 c. 1,050 f. 1,987 b. 998 e. 1,158 14. The projected cash flow for the next year is P 1,000,000, and FCF is expected to grow at a constant rate of 6%. If the company's weighted average cost of capital is 12%, what is the value of its operations? b. 16,666,667 e. 2,100,000 a. 1,714,750 d. 2,000,000 с. 8,833,333 f. 8,333,333
Mooradian Corporation's free cash flow during the just-ended year (t = 0) was $200 million, and its FCF is expected to grow at a constant rate of 7.5% in the future. Assume the firm has zero non-operating assets. If the weighted average cost of capital is 12.5%, what is the firm's total corporate value, in millions? a. $1,600 million b. $4,300 million c. $1,720 million d. $2,867 million e. $4,000 million
An 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
Finance A firm's expected free cash flows in year 1, 2, and 3 are $30 million, $35 million, and $40 million respectively. Beyond year 3 the growth is constant at 5%. The cost of equity is 11% and the Weighted average cost of capital is 9%. What is the value of the firm in year 3 (Horizon value)?
BC Corporation has a weighted average cost of capital of 16%. What is its value if it will provide earnings to investors of P100,000 for the first year, P200,000 for the second year and P250,000 for every year onwards. a. P1,396,031.51 b. P1,225,861.02 c. P1,797,339.48 d. P1,617,271.54 e. None among the other choices
Suppose the Widget Company has a capital structure composed of the following, in billions: Debt = Taka 30 million, Common equity = Taka 30 million. If the before-tax cost of debt is 9%, and the tax rate is 30%. The stock price of common share is Taka 30 in the last year the company paid a dividend of Taka 5 and it will grow at the rate of 5% for ever. What is Widget’s weighted average cost of capital? Now assume that company has a project that needs Taka 130 million and the company plans to maintain its present capital structure and needs to issue new common stocks and the flotation cost would be 15%. Using the concept of breakpoint estimate the new WACC for the company.
A firm’s current profits are P550,000. These profits are expected to grow indefinitely at a constant annual rate of 5 percent. If the firm’s opportunity cost of funds is 8 percent, determine the value of the firm: a. The instant before it pays out current profits as dividends: b. The instant after it pays out current profits as dividends.
Majong Inc. forecasts that it will have the free cash flows shown below. The free cash flows are expected to grow by 5% per year after year 3. Year 1 2 3 CF (S million) - 20 48 54 The weighted average cost of capital is 13%. The firm has $55 million of debt and 10 million shares outstanding. What is the firm value today (in $ million)? What is a good estimate of Majong's value per share?
ACME, Inc. forecasts that it will have the free cash flows shown below. The free cash flows are expected to grow by 4% per year after year 3. Year 1 23 FCF (S million) 20 48 54 The weighted average cost of capital is 11%. The firm has $40 million of debt and 10 million shares outstanding. What is a good estimate of ACME's share price? O $55.25 $27.30 $60.70 $38.55

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