Show your work please.
Problem 3 [1 point]: The free cash flows (in millions) shown below are forecast by Simmons Inc.
If the weighted average cost of capital is 13% and the free cash flows are expected to continue growing at the same rate after Year 3 as from Year 2 to Year 3, what is the Year 0 value of operations, in millions?
Year: 1 2 3
--------------------------------------------------------
Free cash flow: -$20 $42 $45
Perpetual growth rate = (year 3 value/year 2 value-1)
=(45/42-1) = 7.142%
WACC= | 13.00% | ||||||
Year | Previous year FCF | FCF growth rate | FCF current year | Horizon value | Total Value | Discount factor | Discounted value |
1 | 0 | 0.00% | -20 | -20 | 1.13 | -17.6991 | |
2 | -20 | 0.00% | 42 | 42 | 1.2769 | 32.89216 | |
3 | 42 | 0.00% | 45 | 823.044 | 868.044 | 1.442897 | 601.59804 |
Long term growth rate (given)= | 7.14% | Value of Enterprise = | Sum of discounted value = | 616.79 | |||
Where | |||||||
Total value = FCF + horizon value (only for last year) | |||||||
Horizon value = FCF current year 3 *(1+long term growth rate)/( WACC-long term growth rate) | |||||||
Discount factor=(1+ WACC)^corresponding period | |||||||
Discounted value=total value/discount factor |
Show your work please. Problem 3 [1 point]: The free cash flows (in millions) shown below...
he free cash flows (in millions) shown below are forecast by Serta Inc. If the weighted average cost of capital is 12% and the free cash flows are expected to continue growing at the same rate after Year 3 as from Year 2 to Year 3, what is the Year 0 value of operations, in millions? Year: 1 2 3 Free cash flow: −$10 $43 $47 a. $1,524.14 b. $1,414.25 c. $1,277.98 d. $1,182.75 e. $1,327.54
Vasudevan, Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 16% and the free cash flows are expected to continue growing at the same rate after Year 3 as from Year 2 to Year 3, what is the Year 0 value of operations, in millions? Enter your answer rounded to two decimal places. Do not enter $ or comma in the answer box. For example, if your answer is $12,300.456 then...
Vasudevan, Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 14% and the free cash flows are expected to continue growing at the same rate after Year 3 as from Year 2 to Year 3, what is the Year 0 value of operations, in millions? Enter your answer rounded to two decimal places. Do not enter $ or comma in the answer box. For example, if your answer is $12,300.456 then...
Wall Inc. forecasts that it will have the free cash flows (in millions) shown below. Assume the firm has zero non-operating assets. If the weighted average cost of capital is 14% and the free cash flows are expected to continue growing at the same rate after Year 3 as from Year 2 to Year 3, what is the firm’s total corporate value, in millions? Do not round intermediate calculations. Year 1 2 3 Free cash flow -$20.00 $48.00 $50.00 ...
Ryan Enterprises forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13.0%, and the FCFs are expected to continue growing at a 5.0% rate after Year 3. What is the firm's total corporate value, in millions? Year 1 2 3 FCF -$15.0 $10.0 $25.0
QUESTION 10 Wall Inc. forecasts that it will have the free cash flows (in millions) shown below. Its weighted average cost of capital is 14%. The free cash flows are expected to continue growing at the same rate after Year 4 as from Year 3 to Year 4. It currently has 30% debt and 70% equity and 1.5 million shares outstanding. What is your estimate of the stock's current value? 3 Year FCFS $20.00 $48.00 $54.00 4 $59.40
33. Stalcup Enterprises forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13.0%, and the FCFs are expected to continue growing at a 5.0% rate after Year 3. What is the firm's total corporate value, in millions? Year FCF 1 $15.0 2 $10.0 3 $25.0 a. $268.01 b. $196.22 c. $217.75 d. $272.79 e. $239.29
Ryan Enterprises forecasts the free cash flows (in millions) shown below. Assume the firm has zero non-operating assets. The weighted average cost of capital is 13.0%, and the FCFs are expected to continue growing at a 5.0% rate after Year 3. What is the firm’s total corporate value (in millions)? Do not round intermediate calculations. Year 1 2 3 FCF -$15.0 $10.0 $55.0
Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 1 2 3 4 5 FCF -$22.66 $37.2 $43.3 $53 $55.6 The weighted average cost of capital is 10%, 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 18 million shares outstanding. What is the value of the stock price...
30. Ryan Enterprises forecasts the free cash flows (in millions) shown below. Assume the firm has zero non-operating assets. The weighted average cost of capital is 13.0%, and the FCFs are expected to continue growing at a 5.0% rate after Year 3. What is the firm’s total corporate value (in millions)? Do not round intermediate calculations. Year 1 2 3 FCF -$15.0 $10.0 $25.0 a. $268.01 b. $196.22 c. $217.75 d. $272.79 e. $239.29