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- The Prentice Paint Company earned a Net Profit margin of 20% on revenues of $20million this year. Fixed Capital Investment was $2 million and the
depreciation was $3 million.Working capital investment equals 7.5% of the sales level in that year. Net Income, Fixed Capital Investment, depreciation, interest expense, and sales are expected are expected to grow at 10% per year for the next 5 years. After 5 years, the growth rate in sales, net income, and interest expense will decline to a stable 5% per year, and fixed capital investment and depreciation will offset each other. The tax rate is 40%, it has 1 million shares of common stock outstanding, and has long-term debt paying 12.5% interest trading at its par value of $32 million. Calculate the value of the firm and its equity using the FCFF model if the WACC is 17% during the high growth stage and 15% during the stable stage.
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- You have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $3.35 million this year. Depreciation, the increase in net working capital, and capital spending were $295,000, $125,000, and $535,000, respectively. You expect that over the next five years, EBIT will grow at 15 percent per year, depreciation and capital spending will grow at 20 percent per year, and NWC will grow at 10 percent per year. The company has $19.5 million in debt and 400,000 shares outstanding. You believe that sales in Year 5 will be $45.5 million and the price-sales ratio will be 2.15. The company’s WACC is 8.6 percent and the tax rate is 22 percent. What is the price per share of the company's stock?You have looked at the current financial statements for Reigle Homes, Co. The company has an EBIT of $2,850,000 this year. Depreciation, the increase in net working capital, and capital spending were $225,000, $90,000, and $415,000, respectively. You expect that over the next five years, EBIT will grow at 16 percent per year, depreciation and capital spending will grow at 21 percent per year, and NWC will grow at 11 percent per year. The company has $15,100,000 in debt and 345,000 shares outstanding. You believe that sales in five years will be $22,600,000 and the price-sales ratio will be 2.4. 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?You have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $4,050,000 this year. Depreciation, the increase in net working capital, and capital spending were $285,000, $139,000, and $535,000, respectively. You expect that over the next five years, EBIT will grow at 15 percent per year, depreciation and capital spending will grow at 20 per year, and NWC will grow at 10 per year. The company has $23,500,000 in debt and 440,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.4 percent, indefinitely. The company's WACC is 9.45 percent and the tax rate is 23 percent. What is the price per share of the company's stock? D Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Share price
- You have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $3,850,000 this year. Depreciation, the increase in net working capital, and capital spending were $275,000, $133,000, and $525,000, respectively. You expect that over the next five years, EBIT will grow at 20 percent per year, depreciation and capital spending will grow at 10 per year, and NWC will grow at 15 per year. The company has $22,500,000 in debt and 430,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.3 percent, indefinitely. The company's WACC is 9.35 percent and the tax rate is 21 percent. What is the price per share of the company's stock? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Answer is complete but not entirely correct. Share price S 226.59You have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $3,110,000 this year. Depreciation, the increase in net working capital, and capital spending were $238,000, $103,000, and $480,000, respectively. You expect that over the next five years, EBIT will grow at 19 percent per year, depreciation and capital spending will grow at 24 percent per year, and NWC will grow at 14 percent per year. The company currently has $17.7 million in debt and 370,000 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 24 percent. What is the price per share of the company's stock?You have been studying Lucas Corp.’s financial statements. This year, the company has an EBIT of $3.15mil, Depreciation of $295,000, an increase in net working capital of $125,000, and a capital spending of $535,000. You expect that over the next 5 years, EBIT will grow at 15% per year, depreciation and capital spending will grow at 20% per year, and NWC will grow at 10% per year. After year 5, you expect the company’s free cash flow will grow at 3.5% indefinitely. The company has a 21% corporate tax rate and a WACC of 8.9%. a) Compute the free cash flows for the next 5 years. b) Compute the terminal value at the end of year 5. c) What is the company’s enterprise value?
- 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 placeA company has profits of $38,982 this year and expects profits to decrease by $1,728 dollars per year over the next 12 years. If the profits will be continuously invested in an account bearing 6.2% APR compounded continuously, what is the 12-year present value of this income stream?Bonza Corporation generated free cash flow of $80 million this year. For the next two years, the company's free cash flow is expected to grow at a rate of 7.5%. After that time, the company's free cash flow is expected to level off to the industry long-term growth rate of 3% per year. If the weighted average cost of capital is 15% and Bonza Corporation has cash of $100 million, debt of $300 million, and 100 million shares outstanding. What is Bonza Corporation's expected terminal enterprise value in year 2? What is Bonza Corporation's expected free cash flow in year 2? What is Bonza Corporation's expected current share price?
- Gonzales Corportation generated free cash flow of $86 million this year. For the next two years, the company's free flow is expected to grow at a rate of 10%. After that time, the company's free cash flow is expected to level off t othe industry long-term growth rate of 4% per year. If the weighted average cost of capital is 11% and Gonzales Corporation has cash of $100 million, debt of $275 million, and 100 million shares outstanding, what is Gonzales Corporation's expected current share price?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?We hope to increase sales by 25% next year by investing in PP&E. We booked $1,500,000 in sales this year and our depreciation expense was $72,000. We ended this year with $875,000 of PP&E (net). How much should the firm plan for CAPEX assuming that our PP&E (net) and depreciation remain constant as a percentage of sales.