Question

In: Finance

Rio Corp had sales last year of $75 million. Analysts expect sales will grow 30% in...

Rio Corp had sales last year of $75 million. Analysts expect sales will grow 30% in year 1 and 20% in year 2. Operating profit margin is 25%. Capex is 30% of annual sales. Depreciation expense is 70% of capex. Net Working Capital is 40% of sales. The WACC is 10%. The tax rate is 25%. Analysts expect a constant 4% per year growth rate in FCFF after year 3. Excess cash is $150 million, and Rio has $75 million in debt. There are 5 million shares of stock outstanding. What is your estimate of the per-share value of Rio stock?

Solutions

Expert Solution

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Assume that current sales are $30 million, and are expected to grow by 12% in year...
Assume that current sales are $30 million, and are expected to grow by 12% in year 1 and 2. The after-tax profit margin is projected at 8% in year 1, and 9.2% in year 2. The number of shares outstanding is anticipated to be 450,000 for year 1, and 500,000 for year 2. Calculate the projected earnings per share for the next two years.
Seashell Mfg., Inc. had $750 million of sales last year, and it had $435 million of...
Seashell Mfg., Inc. had $750 million of sales last year, and it had $435 million of fixed assets that were used at only 65% of capacity. What is the maximum sales growth rate Seashell could achieve before it had to increase its fixed assets?
Last year LaCroix Optical had $145 million of sales, and it had $40 million of fixed...
Last year LaCroix Optical had $145 million of sales, and it had $40 million of fixed assets that were used at 75% of capacity. Use this information to solve the next two problems. In millions, by how much could LaCroix Optical sales increase before it is required to increase its fixed assets? LaCroix Optical was approached by the Department of Defense (DoD)because of their ability to manufacture the lens required for night vision goggles. LaCroix Optical is the last remaining...
Last year LaCroix Optical had $145 million of sales, and it had $40 million of fixed...
Last year LaCroix Optical had $145 million of sales, and it had $40 million of fixed assets that were used at 75% of capacity. Use this information to solve the next two problems. (10 points) In millions, by how much could LaCroix Optical sales increase before it is required to increase its fixed assets? (10 points) LaCroix Optical was approached by the Department of Defense (DoD)because of their ability to manufacture the lens required for night vision goggles. LaCroix Optical...
71. Last year Dania Corporation's sales were $525 million. If sales grow at 9.8% per year,...
71. Last year Dania Corporation's sales were $525 million. If sales grow at 9.8% per year, how large (in millions) will they be 8 years later?             a.         $1,142.39             b.         $1,109.12             c.         $1,364.22             d.         $1,131.30             e.         $842.93 72. How much would $1, growing at 13.7% per year, be worth after 75 years?             a.         $18,248.03             b.         $15,206.70             c.         $15,358.76             d.         $13,533.96             e.        ...
The Churgin Corp. had sales of $310 million this year, costs were $185 million and net...
The Churgin Corp. had sales of $310 million this year, costs were $185 million and net investment was $55 million. Each of these values is project to grow at 10% per year for the next 5 years, afterwards these values will grow at 4% indefinitely. There are 10.25 million shares outstanding and investors require a 9% rate of return on their investment. The corporate tax rate is 25%. Use the growing perpetuity formula to estimate the terminal value, then calculate...
Hawley Corp. had sales of $95 million for the current year. Costs were $57 million, and...
Hawley Corp. had sales of $95 million for the current year. Costs were $57 million, and net investment was $12 million. Each of these is expected to grow at 13 percent next year, with the growth rate declining by 2 percent per year until the growth rate reaches 5 percent. There are 7.75 million shares of stock outstanding and investors require a return of 11 percent return on the company’s stock. To estimate the terminal value, you feel that the...
The Churgin Corp. had sales of $310 million this year, costs were $185 million and net...
The Churgin Corp. had sales of $310 million this year, costs were $185 million and net investment was $55 million. Each of these values is project to grow at 10% per year for the next 5 years, afterwards these values will grow at 4% indefinitely. There are 10.25 million shares outstanding and investors require a 9% rate of return on their investment. The corporate tax rate is 25%. Use the growing perpetuity formula to estimate the terminal value, calculate the...
Nike had sales of $40 billion in 2019. Suppose you expect its sales to grow at...
Nike had sales of $40 billion in 2019. Suppose you expect its sales to grow at a rate of 4% forever. Based on Nike’s past profitability and investment needs, you expect EBIT to be 10% of sales, increases in net working capital requirements to be 12% of any increase in sales, and capital expenditures to equal depreciation expenses. Nike pays 22% income tax. The opportunity cost of capital is 10%. Nike has 0.9 billion shares outstanding, $3.3 billion in cash,...
Last year Gray Corp. had net sales of $325,000 and a net incomeof $19,000, and...
Last year Gray Corp. had net sales of $325,000 and a net income of $19,000, and its year-end assets were $250,000. The firm's total-debt-to-total-capital ratio was 45.0%. The firm uses only debt and common equity as financing. Based on the DuPont equation, what was the ROE?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT