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

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jeff jeffy answered 1 year ago

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