You are in the middle of valuing a stock using the DCF method. According to your projections, the company is expected to...
You are in the middle of valuing a stock using the DCF method. According to your projections, the company is expected to generate free cash flows of $51 million in 4 years, after which FCFF is expected to grow at a stable rate in perpetuity. Instead of using the perpetuity growth method, you decide to estimate the company's terminal value using the exit multiple approach. Your analysis of comparable companies reveal an average EV/FCFF ratio of 13.3. What is your estimate of the company's Terminal Value? Answer in millions, rounded to one decimal place.
Homework Answers
Enterprise Value/Free cash flow = 13.3
Terminal value = 13.3*51 million
=$678.3 million
Hence, the answer is 678.3 million
Add Answer to:
You are in the middle of valuing a stock using the DCF method. According to your projections, the company is expected to...
You are in the middle of valuing a stock using the DCF method. According to your...
You are in the middle of valuing a stock using the DCF method. According to your projections, the company is expected to generate free cash flows of $51 million in 4 years, after which FCFF is expected to grow at a stable rate in perpetuity. Instead of using the perpetuity growth method, you decide to estimate the company's terminal value using the exit multiple approach. Your analysis of comparable companies reveal an average EV/FCFF ratio of 13.3. What is your...
You are in the middle of valuing a stock using the DCF method. According to your...
You are in the middle of valuing a stock using the DCF method. According to your projections, the company is expected to generate free cash flows of $71 million in 4 years, after which FCFF is expected to grow at a stable rate in perpetuity. Instead of using the perpetuity growth method, you decide to estimate the company's terminal value using the exit multiple approach. Your analysis of comparable companies reveal an average EV/FCFF ratio of 10.3. What is your...
if u answer is 150 million, it’s incorrect answer Example 5.12: A company had total revenues...
if u answer is 150 million, it’s incorrect answer
Example 5.12: A company had total revenues of $200 million, operating profit margin of 20%, and depreciation and amortization expense of $10 million over the trailing twelve months. The company currently has $300 million in total debt and $100 million in cash and cash equivalents. If the company's market capitalization (market value of its equity) is $1 billion, what is its EV/EBITDA ratio? Solution: EBITDA = EBIT + Depreciation & Amortization...
A company is projected to generate a free cash flow of $100 million next year (year...
A company is projected to generate a free cash flow of $100 million next year (year 1) and $120 million in two years (year 2). After that it is projected grow at a steady rate in perpetuity. The company's cost of capital is 10%. It has $400 million of debt and $40 million in cash. There are 60 million shares outstanding. Comparable companies trade at an average EV/FCFF multiple of 6.9. Using the exit multiple method for terminal value and...
1. 2 You are valuing Soda City Inc. It has $100 million of debt, $90 million...
1.
2
You are valuing Soda City Inc. It has $100 million of debt, $90 million of cash, and 150 million shares outstanding. You estimate its cost of capital is 13.0%. You forecast that it will generate revenues of $700 million and $800 million over the next two years. Projected operating profit margin is 20%, tax rate is 30%, reinvestment rate is 20%, and terminal exit value multiple at the end of year 2 is 15. What is your estimate...
You are valuing Soda City Inc. It has $100 million of debt, $90 million of cash,...
You are valuing Soda City Inc. It has $100 million of debt, $90 million of cash, and 150 million shares outstanding. You estimate its cost of capital is 13.0%. You forecast that it will generate revenues of $700 million and $800 million over the next two years. Projected operating profit margin is 20%, tax rate is 30%, reinvestment rate is 20%, and terminal exit value multiple at the end of year 2 is 15. What is your estimate of its...
make sure your answer and solution is right. You are valuing Soda City Inc. It has $100 million of debt, $90 million...
make sure your answer and solution is right.
You are valuing Soda City Inc. It has $100 million of debt, $90 million of cash, and 150 million shares outstanding. You estimate its cost of capital is 13.0%. You forecast that it will generate revenues of $700 million and $800 million over the next two years. Projected operating profit margin is 20%, tax rate is 30%, reinvestment rate is 20%, and terminal exit value multiple at the end of year 2...
If possible answer all. Most imporant are 2 and 3 1. A company is projected to...
If possible answer all. Most imporant are 2 and 3 1. A company is projected to have a free cash flow of $386 million next year, growing at a 5.1% rate until the end of year 3. After that, cash flows are expected to grow at a stable rate of 2.4%. The company's cost of capital is 11.9%. The company owes $93 million to lenders and has $14 million in cash. If it has 243 million shares outstanding, what is...
You are valuing Soda City Inc. It has $118 million of debt, $83 million of cash, and 168 million shares outstanding. You...
You are valuing Soda City Inc. It has $118 million of debt, $83 million of cash, and 168 million shares outstanding. You estimate its cost of capital is 11.2%. You forecast that it will generate revenues of $714 million and $786 million over the next two years. Projected operating profit margin is 27%, tax rate is 26%, reinvestment rate is 34%, and terminal exit value multiple at the end of year 2 is 13. What is your estimate of its...
You are valuing Soda City Inc. It has $100 million of debt, $90 million of cash,...
You are valuing Soda City Inc. It has $100 million of debt, $90 million of cash, and 150 million shares outstanding. You estimate its cost of capital is 13.0%. You forecast that it will generate revenues of $700 million and $800 million over the next two years. Projected operating profit margin is 20%, tax rate is 30%, reinvestment rate is 20%, and terminal exit value multiple at the end of year 2 is 15. What is your estimate of its...
if u answer is 150 million, it’s incorrect answer
Example 5.12: A company had total revenues of $200 million, operating profit margin of 20%, and depreciation and amortization expense of $10 million over the trailing twelve months. The company currently has $300 million in total debt and $100 million in cash and cash equivalents. If the company's market capitalization (market value of its equity) is $1 billion, what is its EV/EBITDA ratio? Solution: EBITDA = EBIT + Depreciation & Amortization...
1.
2
You are valuing Soda City Inc. It has $100 million of debt, $90 million of cash, and 150 million shares outstanding. You estimate its cost of capital is 13.0%. You forecast that it will generate revenues of $700 million and $800 million over the next two years. Projected operating profit margin is 20%, tax rate is 30%, reinvestment rate is 20%, and terminal exit value multiple at the end of year 2 is 15. What is your estimate...
You are valuing Soda City Inc. It has $100 million of debt, $90 million of cash, and 150 million shares outstanding. You estimate its cost of capital is 13.0%. You forecast that it will generate revenues of $700 million and $800 million over the next two years. Projected operating profit margin is 20%, tax rate is 30%, reinvestment rate is 20%, and terminal exit value multiple at the end of year 2 is 15. What is your estimate of its...
make sure your answer and solution is right.
You are valuing Soda City Inc. It has $100 million of debt, $90 million of cash, and 150 million shares outstanding. You estimate its cost of capital is 13.0%. You forecast that it will generate revenues of $700 million and $800 million over the next two years. Projected operating profit margin is 20%, tax rate is 30%, reinvestment rate is 20%, and terminal exit value multiple at the end of year 2...
You are valuing Soda City Inc. It has $100 million of debt, $90 million of cash, and 150 million shares outstanding. You estimate its cost of capital is 13.0%. You forecast that it will generate revenues of $700 million and $800 million over the next two years. Projected operating profit margin is 20%, tax rate is 30%, reinvestment rate is 20%, and terminal exit value multiple at the end of year 2 is 15. What is your estimate of its...
Most questions answered within 3 hours.
-
Which of the following pairs of ions have the same electron
configuration?
I: Br− and Se2−...
asked 1 hour ago -
The Foremost Composite Materials Company is planning a two-day
sales conference for October 19-20. The conference...
asked 1 hour ago -
3) Illustrate the observed pattern of relatedness of organisms
versus adaptations to specific conditions. This means...
asked 2 hours ago -
In winter a lake has a 0.35 m thick ice layer over 1.10 m of
water....
asked 3 hours ago -
Assuming the following has been encrypted with a Vigenere cipher
below, use the method(s) and assumptions...
asked 3 hours ago -
How would I use switch statements to write a program that will
take an input of...
asked 3 hours ago -
Imagine a reaction in which methane gas combusts at a constant
pressure of 1 atm and...
asked 3 hours ago -
Two parallel wires (each 12 m in length) are separated by a
distance of 0.065 m...
asked 3 hours ago -
Suppose there were three masses at the corner of uniform
equilateral triangle. The masses are m1...
asked 3 hours ago -
Situation: A building that is 618 m above the ground floor. How
many times would a...
asked 3 hours ago -
help me and discuss one successful and one
unsuccessful international company/busines in Indonesia.whyit
succeed and why...
asked 3 hours ago -
I- Choose the best answer
Which of the following statements about the structure and
packaging of...
asked 3 hours ago