Question
In: Finance
You are valuing Soda City Inc. It has $114 million of debt, $84 million of cash,...
You are valuing Soda City Inc. It has $114 million of debt, $84
million of cash, and 164 million shares outstanding. You estimate
its cost of capital is 11.6%. You forecast that it will generate
revenues of $711 million and $789 million over the next two years.
Projected operating profit margin is 26%, tax rate is 27%,
reinvestment rate is 31%, and terminal exit value multiple at the
end of year 2 is 13. What is your estimate of its share price?
Round to one decimal place.
[Hint:
Compute projected FCFF for years 1 and 2 based on info provided,
compute terminal value using the exit multiple method, discount it
all to find EV, walk the bridge to Equity, divide by number of
shares outstanding.]
Solutions
jeff jeffy answered 7 months agoRelated Solutions
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