Question

Please answer question 9-11 using thr information provided ! PLEASE SHOW ALL WORK

Use the following information to answer questions 9, 10 and 11 Analysts project the following cash flows for Hopkin's Corporation during the next three years: Year 1: - $27 million (this is negative $27 million), Year 2: $42 million, Year 3: $52 million. Free cash flow is then expected to grow at a constant 6% rate. Hopkin's weighted average cost of capital is WACC = 11%. 9) (10 pts) What is Hopkin's terminal, or horizon, value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3.) 10) (10 pts) What is the current value of operations for Hopkin's? 11) (8 pts) Suppose Hopkin's has $12 million in marketable securities, $75 million in debt, and 22 million shares of stock. What is the intrinsic price per share?

Answer 1

9)

horizon value

=(52*(1+6%))/(11%-6%)

=1102.40 million

10)

current value of operations

=-27/(1+11%)^1+42/(1+11%)^2+52/(1+11%)^3+((52*(1+6%))/(11%-6%))/(1+11%)^3=853.85 million

11)

intrinsic value

=(853.85+12-75)/22

=35.95

the above is answer..