You are valuing Soda City Inc. It has $139 million of debt, $74 million of cash,...

You are valuing Soda City Inc. It has $139 million of debt, $74 million of cash, and 189 million shares outstanding. You estimate its cost of capital is 9.1%. You forecast that it will generate revenues of $731 million and $769 million over the next two years. Projected operating profit margin is 36%, tax rate is 22%, reinvestment rate is 51%, and terminal exit value multiple at the end of year 2 is 10. 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.]

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

jeff jeffy answered 1 month ago

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You are valuing Soda City Inc. It has $139 million of debt, $74 million of cash,...

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