Question

In: Finance

UC Inc. has predicted unlevered free cash flows (FCF) of $19,800, $21,540, $25,300, and $28,900 for...

  1. UC Inc. has predicted unlevered free cash flows (FCF) of $19,800, $21,540, $25,300, and $28,900 for the next 4 years. Find the average growth rate using the predicted values. Then, assuming the growth rate persists forever at this rate, find the present value of the terminal value. Finally, find the total enterprise value. The discount rate is 18%.

Solutions

Expert Solution

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

Richter Manufacturing has a 7% unlevered cost of equity. Richterforecasts the following free cash flows...
Richter Manufacturing has a 7% unlevered cost of equity. Richter forecasts the following free cash flows (FCFs), which are expected to grow at a constant 2% rate after Year 3.Year 1Year 2Year 3FCF$800$825$870What is the horizon value of the unlevered operations? Do not round intermediate calculations. Round your answer to the nearest dollar.$  What is the total value of unlevered operations at Year 0? Do not round intermediate calculations. Round your answer to the nearest dollar.
Richter Manufacturing has a 10% unlevered cost of equity. Richter forecasts the following free cash flows...
Richter Manufacturing has a 10% unlevered cost of equity. Richter forecasts the following free cash flows (FCFs), which are expected to grow at a constant 3% rate after Year 3. Year 1 Year 2 Year 3 FCF $715 $750 $805 a. What is the horizon value of the unlevered operations? b. What is the total value of unlevered operations at Year 0?
Caviar Fishfarm Ltd (‘CFL’) is unlevered, has an equity beta of 1.25 and unlevered cash flows...
Caviar Fishfarm Ltd (‘CFL’) is unlevered, has an equity beta of 1.25 and unlevered cash flows of $76,800 per annum that will continue in perpetuity. The expected market return is 10%p.a and Treasury bills earn 2%p.a. CFL is currently considering issuing $300,000 in new debt with an 8% interest rate. CFL would repurchase $300,000 of its own shares, using the proceeds of the debt issue. There are currently 32,000 shares outstanding and the company’s effective marginal tax rate is 34%....
Caviar Fishfarm Ltd (‘CFL’) is unlevered, has an equity beta of 1.25 and unlevered cash flows...
Caviar Fishfarm Ltd (‘CFL’) is unlevered, has an equity beta of 1.25 and unlevered cash flows of $76,800 per annum that will continue in perpetuity. The expected market return is 10%p.a and Treasury bills earn 2%p.a. CFL is currently considering issuing $300,000 in new debt with an 8% interest rate. CFL would repurchase $300,000 of its own shares, using the proceeds of the debt issue. There are currently 32,000 shares outstanding and the company’s effective marginal tax rate is 34%....
TRX Corporation is expected to generate free cash flows (FCF) of $6.15 million in year 1,...
TRX Corporation is expected to generate free cash flows (FCF) of $6.15 million in year 1, $9.82 million in year 2, $11.5 million in year 3, and $15.01 million in year 4. After then, the FCF will grow by 3% per year. TRX has 9 million shares outstanding, $5 million in excess cash, and it has $1 million in debt. If its cost of capital is 10%, the stock price would be $________? Input your answer without the $ sign...
TRX Corporation is expected to generate free cash flows (FCF) of $6.45 million in year 1,...
TRX Corporation is expected to generate free cash flows (FCF) of $6.45 million in year 1, $8.78 million in year 2, $11.15 million in year 3, and $15.54 million in year 4. After then, the FCF will grow by 3% per year. TRX has 10 million shares outstanding, $4 million in excess cash, and it has $2 million in debt. If its cost of capital is 7%, the stock price would be $________? Input your answer without the $ sign...
Extensive Enterprise Inc. is expected to generate a free cash flow (FCF) of $12,815.00 million this...
Extensive Enterprise Inc. is expected to generate a free cash flow (FCF) of $12,815.00 million this year (FCF₁ = $12,815.00 million), and the FCF is expected to grow at a rate of 21.40% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 2.82% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Extensive Enterprise Inc.’s weighted average cost of...
Acme Inc. is expected to generate a free cash flow (FCF) of $15,290.00 million this year...
Acme Inc. is expected to generate a free cash flow (FCF) of $15,290.00 million this year (FCF₁ = $15,290.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Acme Inc.’s weighted average cost of capital (WACC)...
CoveAuklaOoglu, Inc. is considering a project which has net cash flows (the same as free cash flows) given below:
   CoveAuklaOoglu, Inc. is considering a project which has net cash flows (the same as free cash flows) given below:Year                        CF ($)0                             -1,000 (Initial Outlay)1                             5002                             4003                             3004                             100Given that the company’s WACC is 10%, what is the company’s NPV? (Points : 3.4)        $78.82       $109.45       $49.18       $54.06  Garrod Dickens wants to calculate the IRR for the above project (use information in Question 22) for CoveAuklaOoglu, Inc. His answer would be: (Points : 3.4)        11.8%       14.5%       12.45%       13.02%  Garrod Dickens also wants to...
Luthor Corp. is expected to generate free cash flow (FCF) of $7,790.00 million this year (FCF₁...
Luthor Corp. is expected to generate free cash flow (FCF) of $7,790.00 million this year (FCF₁ = $7,790.00 million), and the FCF is expected to grow at a rate of 21.40% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 2.82% per year, which will last forever (FCF₄). Assume the firm has no non-operating assets. If Luthor Corp.’s weighted average cost of capital (WACC) is...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT