In: Finance
It is the end of 2019. In the most recent year (2019), UPipe had an EBIT of $170 million. Depreciation was $34 million, increase in net working capital was $17 million and capital expenditure was $42.5 million.
Over the next 4 years, EBIT is expected to grow by 20% per year, depreciation by 15% per year, capital expenditure by 25% per year and change in net working capital by 15% per year. The annual free cash flow is expected to grow by 3% per year after 2023.
The weighted average cost of capital is 13% and the average tax rate is 21%. The firm has $430 million of debt and 10 million shares outstanding.
1. What was the free cash flow in 2019 (in $ million)?
2. What is the expected free cash flow in 2023 (in $ million)?
3. What is the terminal value in 2023 (in $ million)?
4. What is the firm value today (in $ million)?
5. What should be the stock price now?
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