Homework Answers
1). Expected FCF = [EBIT(1 - Taxes)] + Depreciation & Amortization - Capex – Change in Working Capital
= 14,200 + 0 - 2,130 - 35 = $12,035 million
Hence, 4th option is correct.
2-a). Total Firm Value = Expected FCF / [WACC - g]
= 12,035 / [0.1062 - 0.0354] = 12,035 / 0.0708 = $169,985.88 million
So, 3rd option is correct.
2-b). Intrinsic Common Equity Value = Total Firm Value - Market Value of Debt - Market Value of Preferred Stock
= 169,985.88 - 76,494 - 42,496 = $50,995.88 million
So, 4th option is correct.
2-c). Intrinsic Value per share = Intrinsic Common Equity Value / Common Stock Outstanding
= 50,995.88 / 525 = $97.14
So, 3rd option is correct.
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