Question
In: Finance
Tiara Wings Ltd is a firm that makes Tiaras and chicken wings. The firm has projected...
Tiara Wings Ltd is a firm that makes Tiaras and chicken wings. The firm has projected its future growth in the table below. The firm has a required Return on Equity of 15% and WACC of 12%, the long-run growth rate after year 5 is 4%. The firm has $5 million in debt and 865,000 shares outstanding. The accounting statement is in thousands of $. Assuming that the projections are correct, compute the stock price per share using:
a) the WACC/FCF method
b) the Flow-to-Equity method
|
Latest |
||||||||
|
Year |
Forecast |
|||||||
|
-1 |
0 |
1 |
2 |
3 |
4 |
5 |
||
|
1. |
Sales |
39,357.0 |
40,123.0 |
36,351.0 |
30,155.0 |
28,345.0 |
29,982.0 |
30,450.0 |
|
2. |
Cost of Goods Sold |
18,564.0 |
22,879.0 |
21,678.0 |
17,560.0 |
16,459.0 |
15,631.0 |
14,987.0 |
|
3. |
Other Costs |
7,645.0 |
8,025.0 |
6,797.0 |
5,078.0 |
4,678.0 |
4,987.0 |
5,134.0 |
|
4. |
EBITDA (1 – 2 – 3) |
13,148.0 |
9,219.0 |
7,876.0 |
7,517.0 |
7,208.0 |
9,364.0 |
10,329.0 |
|
5. |
Depreciation and Amortization |
5,745.0 |
5,678.0 |
5,890.0 |
5,670.0 |
5,908.0 |
6,107.0 |
5,908.0 |
|
6. |
EBIT (pretax profit) (4 – 5) |
7,403.0 |
3,541.0 |
1,986.0 |
1,847.0 |
1,300.0 |
3,257.0 |
4,421.0 |
|
7. |
Tax at 35% |
2,591.1 |
1,239.4 |
695.1 |
646.5 |
455.0 |
1,140.0 |
1,547.4 |
|
8. |
Profit after Tax (6 – 7) |
4,811.0 |
2,301.7 |
1,290.9 |
1,200.6 |
845.0 |
2,117.1 |
2,873.7 |
|
9. |
Change in Working Capital |
566.0 |
784.0 |
-54.0 |
-342.0 |
-245.0 |
127.0 |
235.0 |
|
10. |
Investment (change in gross PP&E) |
6,467.0 |
6,547.0 |
7,345.0 |
5,398.0 |
5,470.0 |
6,420.0 |
6,598.0 |
Solutions
jeff jeffy answered 2 years agoRelated Solutions
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