Question

You have been provided the following information on BMS Inc, an all-equity financed manufacturer of building materials.

• In the most recent year, which was a bad one, the company made only €40 million in net income. It expects next year to be normal. The book value of equity of the company is €1 billion, and it expects next year a Return on Equity of 10%.
• The company expects to make €80 million in new capital expenditures next year. It expects depreciation, which was €60 million this year, to grow 10% next year.
• The company had revenues of €1.5 billion this year, and it maintained a non-cash working capital investment of 10% of revenues. It expects revenues to increase 20% next year and working capital to decline to 9.5% of revenues.

Next year’s estimated net income is:

Select one:

a. 70 million

b. 100 million

c. 44 million

d. 140 million

e. 40 million

Question 34

Next year’s estimated net capital expenditure is:

Select one:

a. 60 million

b. 80 million

c. 88 million

d. 14 million

e. 20 million

Question 35

Next year’s estimated Change in Working Capital is:

Select one:

a. 150 million

b. 12 million

c. 30 million

d. 21 million

e. 171 million

Question 36

Next year’s estimated Free Cash Flow to Equity (FCFE) is:

Select one:

a. 38 million

b. 59 million

c. 9 million

d. 56 million

e. 65 million

DUV Co. is a beverage company. The firm recently reported Earnings per Share (EPS) of €2.23. The firm has a current (trailing) P/E ratio of 14.3. The median P/E ratio for the beverage industry is 20.1. Using the above information, estimate the intrinsic (fundamental) value of DUV Co. based on a P/E relative valuation framework (two decimals, no rounding).

Select one:

a. 44.82

b. 2.23

c. 22.69

d. 31.89

e. 12.91

Answer 1

The calculations have been uploaded. Please find the attachments.