Question

In: Finance

Selected data for the Derby Corporation are shown below. Use the data to answer the following...

Selected data for the Derby Corporation are shown below. Use the data to answer the following questions.
INPUTS (In millions) Year
Current Projected
0 1 2 3 4
Free cash flow -$20.0 $20.0 $80.0 $84.0
Marketable Securities $40
Notes payable $100
Long-term bonds $300
Preferred stock $50
WACC 9.00%
Number of shares of stock 40
a. Calculate the estimated horizon value (i.e., the value of operations at the end of the forecast period immediately after the Year-4 free cash flow). Assume growth becomes constant after Year 3.
Current Projected
0 1 2 3 4
Free cash flow -$20.0 $20.0 $80.0 $84.0
Long-term constant growth in FCF
WACC
Horizon value
Cash flows
b. Calculate the present value of the horizon value, the present value of the free cash flows, and the estimated Year-0 value of operations.
Value of operations (NPV of all the cash flows)

Is the free cash flow the same as the cash flow?

Is the horizon value same as projected 3 and 4?

I want to calculate the highlighted boxes.

Solutions

Expert Solution

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

Selected data for the Derby Corporation are shown below. Use the data to answer the following...
Selected data for the Derby Corporation are shown below. Use the data to answer the following questions. INPUTS (In millions) Year Current Projected 0 1 2 3 4 Free cash flow -$20.0 $20.0 $80.0 $84.0 Marketable Securities $40 Notes payable $100 Long-term bonds $300 Preferred stock $50 WACC 9.00% Number of shares of stock 40 a. Calculate the estimated horizon value (i.e., the value of operations at the end of the forecast period immediately after the Year-4 free cash flow)....
Selected financial data for Widget Unioned is presented below, use the information to answer the following...
Selected financial data for Widget Unioned is presented below, use the information to answer the following questions: Current Assets As of Dec. 31, 2017 Dec. 31, 2016 Cash and short-term investments $1,267,038 $   616,604 Accounts Receivable (net) 490,816 665,828 Inventories 338,599 487,505 Prepaid Expenses and other current assets    292,511      291,915 Total Current Assets $2,388,964 $2,061,852 Current Liabilities Short-term borrowings $   25,190 $   38,108 Current portion of long-term debt 182,295 210,090 Accounts payable 296,307 334,247 Accrued liabilities 941,912 743,999 Income taxes payable    203,049    239,793...
4. Use the following table to calculate the amounts listed below: Hellitech Corporation – Selected Data...
4. Use the following table to calculate the amounts listed below: Hellitech Corporation – Selected Data Credit Sales $127,382 Cost of Goods Sold $76,157 Beginning Inventory $10,583 ENDING INVENTORY $13,685 Accounts Receivable BEGINING $5,130 ENDING $5,690. Accounts Payable BEGINING $7,205, ENDING $8,105. What is the: ? Inventory Period ? Accounts Receivable Period ? Accounts Payable Period ? Operating Cycle ? Cash Cycle
Use the following data to answer the questions below:
Use the following data to answer the questions below:             Q                 VC             MC           AVC              1                 $10              ___            ___                                   2                16              ___            ___                       3                20              ___            ___                                   4                25              ___            ___              5                31              ___            ___              6                  38              ___            ___                  7                  46              ___            ___8                  55              ___            ___9                  65              ___            ___         a. Calculate the marginal cost and average variable cost for each level of production.b. How much would the firm produce if it could sell its product for...
[The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below:...
[The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below:   Per Unit Percent of Sales   Selling price    $ 140 100%   Variable expenses 91   65%   Contribution margin    $ 49   35%     Fixed expenses are $88,000 per month and the company is selling 3,000 units per month. Required: 1-a. The marketing manager argues that a $9,300 increase in the monthly advertising budget would increase monthly sales by $21,500. Calculate the increase or decrease in net operating...
[The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below:...
[The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below:   Per Unit Percent of Sales   Selling price    $ 80 100%   Variable expenses 44   55%   Contribution margin    $ 36   45%     Fixed expenses are $76,000 per month and the company is selling 2,500 units per month. 2. value: 1.25 points Required information Required: 1-a. The marketing manager argues that a $8,100 increase in the monthly advertising budget would increase monthly sales by $15,500. Calculate the...
Use the ERA and Win% data for the 8 randomly selected MLB pitchers below to answer...
Use the ERA and Win% data for the 8 randomly selected MLB pitchers below to answer the following questions. (please include the steps used to answer the questions. Thank you.) ERA 0.035 0.021 0.022 0.025 0.015 0.029 0.015 0.026 Win% 0.545 0.554 0.718 0.610 0.675 0.535 0.665 0.604 Question 1A Compute the IQR for Win%. Question 2B Compute the covariance between ERA and Win%. Question 3C Compute the correlation between ERA and Win%.
Use the chart of data below to answer the following questions. This data represents enrollment for...
Use the chart of data below to answer the following questions. This data represents enrollment for the Fall semesters 2013 – 2017 years. Part a: Is being part time dependent upon gender? Part b: Is the probability of being a male student enrolled (or female) dependent upon year? Part c: Create a probability tree, with the appropriate probabilities using the data from the table. Assume the tree is showing the PT or FT probabilities given the gender of the student....
Following is data for Pitt-Vaughn Academy (PVA). Use the data below to answer each of the...
Following is data for Pitt-Vaughn Academy (PVA). Use the data below to answer each of the enumerated requirements. Pitt-Vaughn Academy (PVA), a school owned by Lily Pitt-Vaughn, provides training to individuals who pay tuition directly to the school. PVA also offers training to groups in off-site locations. PVA initially records prepaid expenses and unearned revenues in balance sheet accounts. Its unadjusted trial balance as of December 31 follows along with descriptions of items a through h that require adjusting entries...
Following is data for Pitt-Vaughn Academy (PVA). Use the data below to answer each of the...
Following is data for Pitt-Vaughn Academy (PVA). Use the data below to answer each of the enumerated requirements. Pitt-Vaughn Academy (PVA), a school owned by Lily Pitt-Vaughn, provides training to individuals who pay tuition directly to the school. PVA also offers training to groups in off-site locations. PVA initially records prepaid expenses and unearned revenues in balance sheet accounts. Its unadjusted trial balance as of December 31 follows along with descriptions of items a through h that require adjusting entries...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT