Value of firm is equal to the present value of all future free cash flows
-22.32/(1.12)+38.3/(1.12)^2 + 43.7/(1.12)^3 + 51.7/(1.12)^4 + 56.4/(1.12)^5 + 56.4(1.04)/(1.12)^5 (12%-4%)
= $522.61 million
Value per share = (522.61 – 26)/18
= $27.59 per share
False
Year 1 2 3 4 5 FCF -$22.32 $38.3 $43.7 $51.7 $56.4 The weighted average cost...
Year 1 2 3 4 5 FCF -$22.62 $38.7 $43.3 $52.6 $56.4 The weighted average cost of capital is 9%, and the FCFs are expected to continue growing at a 4% rate after Year 5. The firm has $25 million of market-value debt, but it has no preferred stock or any other outstanding claims. There are 18 million shares outstanding. Also, the firm has zero non-operating assets. What is the value of the stock price today (Year 0)? Round your...
Quantitative Problem 2: Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 2 3 4 5 FCF - $22.25 $37.5 $43.8 $51.8 $55.9 The weighted average cost of capital is 10%, and the FCFs are expected to continue growing at a 4% rate after Year 5. The firm has $24 million of market value debt, but it has no preferred stock or any other outstanding claims. There are 20 million shares outstanding. What is the value...
Quantitative Problem 2: Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 2 3 4 FCF -$22.38 $37.5 $43.3 $51.5 $55.6 The weighted average cost of capital is 12 %, and the FCFS are expected to continue growing at a 5% rate after Year 5. The firm has $26 million of market-value debt, but it has no preferred stock or any other outstanding claims. There are 21 million shares outstanding. What is the value of the...
Quantitative Problem 2: Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 1 2 3 4 5 FCF $22.53 $37 $43.1 $52.4 $55 The weighted average cost of capital is 12%, and the FCFs are expected to continue growing at a 4% rate after Year 5. The firm has $25 million of market value debt, but it has no preferred stock or any other outstanding claims. There are 18 million shares outstanding. What is the value...
Quantitative Problem 2: Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. 5 Year 1 2 3 4 FCF -$22.74 $37.1 $43.1 $52.3 $55.3 The weighted average cost of capital is 12%, and the FCFs are expected to continue growing at a 5% rate after Year 5. The firm has $25 million of market value debt, but it has no preferred stock or any other outstanding claims. There are 18 million shares outstanding. Also, the firm has...
Quantitative Problem 1: Assume today is December 31, 2013. Barrington Industries expects that its 2014 after-tax operating income [EBIT(1 - T)] will be $410 million and its 2014 depreciation expense will be $65 million. Barrington's 2014 gross capital expenditures are expected to be $100 million and the change in its net operating working capital for 2014 will be $25 million. The firm's free cash flow is expected to grow at a constant rate of 4.5% annually. Assume that its free...
Quantitative Problem 1: Assume today is December 31, 2016. Barrington Industries expects that its 2017 after-tax operating income (EBIT(1 -T)] will be $450 million and its 2017 depreciation expense will be $65 million. Barrington's 2017 gross capital expenditures are expected to be $120 million and the change in its net operating working capital for 2017 will be $30 million. The firm's free cash flow is expected to grow at a constant rate of 4.5% annually. Assume that its free cash...
2. Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 1 2 3 4 5 FCF $-22.11 $37.7 $43.5 $52.7 $56.4 The weighted average cost of capital is 9%, and the FCFs are expected to continue growing at a 3% rate after Year 5. The firm has $24 million of market-value debt, but it has no preferred stock or any other outstanding claims. There are 20 million shares outstanding. What is the value of the stock...
Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 1 2 3 4 5 FCF -$22.02 $38 $43.2 $51.7 $55.1 The weighted average cost of capital is 10%, and the FCFs are expected to continue growing at a 4% rate after Year 5. The firm has $25 million of market-value debt, but it has no preferred stock or any other outstanding claims. There are 20 million shares outstanding. Also, the firm has zero non-operating assets. What...
Quantitative Problem 1: Assume today is December 31, 2019. Barrington Industries expects that its 2020 after-tax operating income (EBIT(1 - 1)] will be $420 million and its 2020 depreciation expense will be $65 million. Barrington's 2020 gross capital expenditures are expected to be $110 million and the change in its net operating working capital for 2020 will be $30 million. The firm's free cash flow is expected to grow at a constant rate of 5.5% annually. Assume that its free...