Use the table for the question(s) below. FCF Forecast ($ million) Year Sales 0 240 1 270 Growth versus Prior Year 12.5% EBIT (10% of Sales) 27.00 Less: Income Tax (20%) (5.40) Less Increase in NWC (12% of Change in Sales) 3.60 Free Cash Flow 18.00 2 290 7.4% 29.00 5.80 2.40 20.80 3 310 6.9% 31.00 6.20 2.40 22.40 325.5 5.0% 32.55 6.51 1.86 2418 Banco Industries expect sales to grow at a rapid rate over the next three years, but settle to an industry growth rate of 7% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. If Banco industries has a weighted average cost of capital of 11%, $30 million in cash, $60 million in debt, and 18 million shares outstanding. which of the following is the best estimate of Banco's stock price at the start of year 1?
Use the table for the question(s) below. FCF Forecast ($ million) Year Sales 0 240 1 270 Growth versus Prior Year 12.5% EBIT (10% of Sales) 27.00 Less: Income Tax (20%) (5.40) Less Increase in NWC (12% of Change in Sales) 3.60 Free Cash Flow 18.00 2 290 7.4% 29.00 5.80 2.40 20.80 3 310 6.9% 31.00 6.20 2.40 22.40 325.5 5.0% 32.55 6.51 1.86 2418 Banco Industries expect sales to grow at a rapid rate over the next three years, but settle to an industry growth rate of 7% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. If Banco industries has a weighted average cost of capital of 11%, $30 million in cash, $60 million in debt, and 18 million shares outstanding. which of the following is the best estimate of Banco's stock price at the start of year 1?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Use the table for the question(s) below.
FCF Forecast (S million)
Year
Sales
1
270
12.5%
27.00
(5.40)
Less Increase in NWC (12% of Change in Sales) 3.60
Free Cash Flow
18.00
Growth versus Prior Year
EBIT (10% of Sales)
Less: Income Tax (20%)
0
240
OA. $46.15
B. $25.64
OC. $12.82
D. $23.07
2
290
7.4%
29.00
5.80
2.40
20.80
•
3
310
6.9%
31.00
6.20
2.40
22.40
4
325.5
5.0%
32.55
6.51
1.86
2418
Banco Industries expect sales to grow at a rapid rate over the next three years, but settle to an industry growth rate of
7% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. If Banco industries has a
weighted average cost of capital of 11%, $30 million in cash, $60 million in debt, and 18 million shares outstanding,
which of the following is the best estimate of Banco's stock price at the start of year 1?
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