Year Earnings and FCF Forecast ($ million) 1 Sales 2 Growth vs. Prior Year 3 Cost of Goods Sold 4 Gross Profit 5 Selling, General, & Admin. 6 Depreciation 7 EBIT 8 Less: Income Tax at 25% 9 Plus: Depreciation 10 Less: Capital Expenditures 11 Less: Increase in NWC 12 Free Cash Flow 433.0 468.0 8.1% (313.6) 154.4 (93.6) (7.0) 53.8 (13.5) 7.0 (7.7) (6.3) 33.4 2 516.0 10.3% (345.7) 170.3 (103.2) (7.5) 59.6 (14.9) 7.5 (10.0) (8.6) 33.6 3 547.0 6.0% (366.5) 180.5 (109.4) (9.0) 62.1 (15.5) 9.0 (9.9) (5.6) 40.1 574.3 5.0% (384.8) 189.5 (114.9) (9.5) 65.2 (16.3) 9.5 (10.4) (4.9) 43.1
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- Assume that IWT has completed its IPO and has a $112.5 million capital budget planned for the coming year. You have determined that its present capital structure (80% equity and 20% debt) is optimal, and its net income is forecasted at $140 million. Use the residual distribution approach to determine IWT’s total dollar distribution. Assume for now that the distribution is in the form of a dividend. Suppose IWT has 100 million shares of stock outstanding. What is the forecasted dividend payout ratio? What is the forecasted dividend per share? What would happen to the payout ratio and DPS if net income were forecasted to decrease to $90 million? To increase to $160 million? In general terms, how would a change in investment opportunities affect the payout ratio under the residual distribution policy? What are the advantages and disadvantages of the residual policy? (Hint: Don’t neglect signaling and clientele effects.)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. 84,339Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: After that, the free cash flows are expected to grow at the industry average of 4.3% per year. Using the discounted free cash flow model and a weighted average cost of capital of 14.3%: a. Estimate the enterprise value of Heavy Metal. b. If Heavy Metal has no excess cash, debt of $291 million, and 35 million shares outstanding, estimate its share price.
- Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: Thereafter, 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 14.2% 4 a. Estimate the enterprise value of Heavy Metal b. If Heavy Metal has no excess cash, debt of $287 million, and 43 million shares outstanding, estimate its share price.Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: Thereafter, the free cash flows are expected to grow at the industry average of 4.5% 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 $280 million, and 36 million shares outstanding, estimate its share price. a. Estimate the enterprise value of Heavy Metal. The enterprise value will be $ million. (Round to two decimal places.) b. If Heavy Metal has no excess cash, debt of $280 million, and 36 million shares outstanding, estimate its share price. The stock price per share will be $ (Round to the nearest cent.)Heavy Metal Corporation is expected to generate the following free cash flows over the next five years:. Thereafter, the free cash flows are expected to grow at the industry average of 4.4% per year. Using the discounted free cash flow model and a weighted average cost of capital of 14.2%: a. Estimate the enterprise value of Heavy Metal. b. If Heavy Metal has no excess cash, debt of $283 million, and 40 million shares outstanding, estimate its share price. a. Estimate the enterprise value of Heavy Metal. The enterprise value will be $ million. (Round to two decimal places.) b. If Heavy Metal has no excess cash, debt of $283 million, and 40 million shares outstanding, estimate its share price. The stock price per share will be $ (Round to the nearest cent.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Year FCF ($ million) 1 54.8 Print 2 67.6 3 78.6 Done 4 74.6 5 81.2 -
- CX Enterprises has the following expected dividends $1.09 in one year, $1.23 in two years, and $1.34 in three years After that, its dividends are expected to grow at 4.3% per year forever (so that year 4's dividend will be 4.3% more than 1.34 and so on). If CX's equity cost of capital is 11.5%, what is the current price of its stock? The price of the stock will be $ (Round to the nearest cent.)Krell Industries has a share price of $22.32 today. If Krell is expected to pay a dividend of $1.07 this year and its stock price is expected to grow to $23.71 at the end of the year, what is Krell's dividend yield and equity cost of capital? a) The dividend yield is ______%. (Round to one decimal place.) b) Capital Gain Rate_____ c) The total return ____%CX Enterprises has the following expected dividends: $1.13 in one year, $1.21 in two years, and $1.34 in three years. After that, its dividends are expected to grow at 3.6% per year forever (so that year four's dividend will be 3.6% more than $1.34 and so on). If CX's equity cost of capital is 11.7%, what is the current price of its stock? The price of the stock will be $ (Round to the nearest cent.)
- An analyst is estimating the intrinsic value Harkleroad Technologies' stock. Harkleroad's free cash flow is expected to be $25 million this year, and grow at a constant rate of 7% a year. The company's WACC is 10%. Harkleroad has $150 million of long-term debt and $70 preferred stock, and 20 million outstanding shares of common stock. What is the estimated per-share price of Harkleroad Technologies' common stock?CX Enterprises has the following expected dividends: $1.15 in one year, $1.23 in two years, and $1.29 in three years. After that, its dividends are expected to grow at 3.9% per year forever (so that year 4's dividend will be 3.9% more than $1.29 and so on). If CX's equity cost of capital is 11.7%, what is the current price of its stock? (Round to the nearest cent.)You expect X-Co will pay a dividend of $76 million and repurchase $100 million of its common shares next year (Year 1) with both expected to grow 8% in Year 2 and 6% in Year 3. If you expect the company to be sold for $12 billion at the end of Year 3, and you have calculated the cost of equity to be 8.4%, what do you estimate the true value of the company’s net worth to be now? (First draw a timeline. Assume all cash flows are at the end of the year.)