Chapter 9, Problem 3P

An analyst is trying to estimate the intrinsic value of the stock of ATR Kim Eng. The analyst estimates that ATR Kim Eng's free cash flow during the next year will be P25 million. The analyst also estimates that the company's free cash flow will increase at a constant rate of 7% a year and that the company's WACC is 10%. ATR Kim Eng has P200 million of long-term debt and preferred stock and 30 million outstanding shares of common stock. What is the estimated per-share price of ATR Kim Eng's common stock? 27.78 21.11 8.33 34.43

An analyst is trying to estimate the intrinsic value of the stock of ATR Kim Eng. The analyst estimates that ATR Kim Eng’s free cash flow during the next year will be P25 million. The analyst also estimates that the company’s free cash flow will increase at a constant rate of 7% a year and that the company’s WACC is 10%. ATR Kim Eng has P200 million of long-term debt and preferred stock and 30 million outstanding shares of common stock. In the Philippine stock exchange, ATR Kim Eng's common stock is traded at P30.00. What can be said of the stock price's condition?   a. undervalued/underpriced b. overvalued/overpriced c. oversold d. in equillibrium

STARS Inc. forecasts a positive Free Cash Flow for the coming year, with FCF1 = $10,000,000, and it expects a growth rate of 20% for the next two years. After Year 3, FCF is expected to grow at a constant rate of 6% forever. The Weighted Average Cost of Capital (WACC) is 10.00%, and the company has $85,000,000 of long-term debt (the remainder is comprised of common equity) and 12.0 million shares of common stock outstanding. What is the firm's estimated intrinsic value per share of common stock? (Ch. 9) Group of answer choices 27.75 21.22 19.29 24.12 26.38

Full Boat Manufacturing has projected sales of $124.5 million next year. Costs are expected to be $74.4 million and net investment is expected to be $15.05 million. Each of these values is expected to grow at 14 percent the following year, with the growth rate declining by 2 percent per year until the growth rate reaches 6 percent, where it is expected to remain indefinitely. There are 6.6 million shares of stock outstanding and investors require a return of 13 percent return on the company’s stock. The corporate tax rate is 24 percent.    a. What is your estimate of the current stock price?   b. Suppose instead that you estimate the terminal value of the company using a PE multiple. The industry PE multiple is 11. What is your new estimate of the company’s stock price?

You are running a hot Internet company. Analysts predict that its earnings will grow at 30% per year for the next five years. After that, as competition increases, earnings growth is expected to slow to 4% per year and continue at that level forever. Your company has just announced earnings of $1 million. What is the present value of all future earnings if the interest rate is 8%? (Assume all cash flows occur at the end of the year.) The present value is $ million. (Round to two decimal places.) ←

CelebNav, Inc., had sales last year of $700,000, and the analysts are predicting strong future performance for the start-up, with sales growing 20 percent a year for the next three years. After that, the sales should grow 11 percent per year for two years, at which time the owners are planning to sell the company. What are the projected sales for the last year before the sale?

A firm expects to generate $100 million in free cash flow in a year.  This free cash flow is expected to grow at a constant annual rate of 5%.  The firm has a 20% cost of capital, $300 million of debt, and 20 million shares of common stock outstanding. Compute the value of the firm's common stock (to the nearest dollar).

MacJolly Corporation is expecting a cash flow of P3,000,000 next year and it is expected to constantly increase by 4% for the next 2 years. After the third year, experts predict that the cash flow of the company will remain flat at P7,000,000 every year. The company has a total preferred shares of P10,000,000 and a total debt of P30,000,000. The required return is currently at 8% while the total common share outstanding is at 1,500,000 shares. 1. What is the value of the company?(Round off answer to two decimal places and include comma) 2. What is the value of the common stock per share?(Round off answer to two decimal places and include comma)

You are running a hot Internet company. Analysts predict that its earnings will grow at 10% per year for the next five years. After that, as competition increases, earnings growth is expected to slow to 3% per year and continue at that level forever. Your company has just announced earnings of $4 million. What is the present value of all future earnings if the interest rate is 9%? (Assume all cash flows occur at the end of the year.) The present value is $ million. (Round to two decimal places.) ...