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In: Advanced Math

You are valuing Soda City Inc. It has $110 million of debt, $90 million of cash,...

You are valuing Soda City Inc. It has $110 million of debt, $90 million of cash, and 140 million shares outstanding. You estimate its cost of capital is 12.4%. You forecast that it will generate revenues of $700 million and $800 million over the next two years, after which it will grow at a stable rate in perpetuity. Projected operating profit margin is 20%, tax rate is 30%, reinvestment rate is 20%, and terminal EV/FCFF exit multiple at the end of year 2 is 15. What is your estimate of its share price?

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Colby Messinger answered 2 years ago
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