Question
In: Finance
The tables below present expected free cash flow related data for XYZ for Year 1 and...
The tables below present expected free cash flow related data for XYZ for Year 1 and selected balance sheet data as of Year 0. XYZ has reached the steady state growth phase and XYZ’s WACC is 8%.
Year 0 Data
|
Debt |
4,000 |
|
Shares outstanding |
400 |
Year 1 Data
|
NOPLAT |
4,500 |
|
Free Cash Flow |
1,200 |
|
CAPEX |
130 |
You expect that XYZ would grow at 3.5% per year in perpetuity. What
is XYZ’s intrinsic value per share.
A.
56.67
B.
76.5
C.
67.5
D.
78.21
Solutions
Expert Solution
| As per Gordon model, value of firm= Expected free cashflow/(cost of capital-growth) | ||
| So value of firm= | 1200/(0.08-0.035) | |
| = | $ 26,666.67 | |
| Value of equity = | Value of firm - marker value of debt | |
| 26666.67-4000 | ||
| $ 22,666.67 | ||
| Shares outstanding= | 400.00 | |
| Value per stock | $ 56.67 | (22666.67/400) |
| So the correct answer is option A i.e. $ 56.67 |
jeff jeffy answered 1 year agoRelated Solutions
The tables below present expected free cash flow related data for XYZ for Year 1 and...
The tables below present expected free cash flow related data
for XYZ for Year 1 and selected balance sheet data as of Year
0. XYZ has reached the steady state growth phase and
XYZ’s WACC is 8%.
Year 0
Data
Debt
4,000
Shares outstanding
400
Year 1 Data
NOPLAT
4,500
Free Cash Flow
1,200
CAPEX
130
You expect that XYZ would grow at 2.0% per year in perpetuity. What
is XYZ’s intrinsic value per share.
A.
67.5
B.
40
C.
75...
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2024 $0.9 million.
2025 $2.2 million.
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Please show your work so I can recreate in
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Given the following information: Year 1 free cash flow: 40
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Year 1 Free cash flow: 40 million
Year 2 Free cash flow 90 m
Year 3 Free cash flow 100 m
After year 3, expected FCF growth is expected to be 4%
The cost of capital is 9%
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Debt is currently 25 million
Preferred stock = 5 million
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Year 3 Free cash flow 100 m
After year 3, expected FCF growth is expected to be 4%
The cost of capital is 9%
Short term investments = 50 million
Debt is currently 25 million
Preferred stock = 5 million
There are 20 million outstanding stock shares.
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Rent (mixed space, production and administration):
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