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...
Listed below are yearly forecasts of “free cash flow” (operating cash flow plus investment-related cash flow)...
Listed below are yearly forecasts of “free cash flow” (operating
cash flow plus investment-related cash flow) for Tomkat LLC.
Year Cash Flow
2020 -$2.8 million.
2021 -$2.0 million.
2022 -$1.2 million.
2023 -$0.2 million.
2024 $0.9 million.
2025 $2.2 million.
After year 2025, cash flows are anticipated to grow by 3% per
year, in perpetuity. For simplicity, assume all that cash flows
occur at the end of each year. Assume a discount rate of 8% per
year.
What is the...
Using the following free cash flow data: Year Cash Flow 2017 $4,000,000
Using the following free cash flow data:
Year
Cash Flow
2017
$4,000,000
2018
$4,400,000
Prepare a 10-year cash flow forecast based upon the rate of
growth in cash flow between 2017 and 2018.
Calculate the net present value of the forecasted cash flows
assuming an immediate investment cost of $18,500,000
Please show your work so I can recreate in
excel
A company's most recent annual Free Cash Flow is $180,000,000. Free cash flow is expected to...
A company's most recent annual Free Cash Flow is $180,000,000.
Free cash flow is expected to grow by 15% per year for the next 10
years and then grow by 3% per year thereafter. Investors required
rate of return is 11%. What is the current value of the stock?
a. $11,300,755,080
b. $2,250,000,000
c. $5,404,011,121
d. $1,636,363,636
Given the following information: Year 1 free cash flow: 40 million Year 2 free cash flow...
Given the following information: Year 1 free cash flow: 40
million Year 2 free cash flow 90 million Year 3 free cash flow 100
million After year 3, expected FCF growth is expected to be 4% The
cost of capital is 9% Short term investments is 50 million Debt is
currently 25 million Preferred shock is 5 million There are 20
million outstanding stock shares.
1. Calculate the intrinsic stock price
. If the current stock price was $100.00, would...
Given the following information: Year 1 Free cash flow: 40 million Year 2 Free cash flow...
Given the following information:
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%
Short term investments = 50 million
Debt is currently 25 million
Preferred stock = 5 million
There are 20 million outstanding stock shares.
1. Calculate the intrinsic stock price.
2. If the current stock price was $100.00, would...
Given the following information: Year 1 Free cash flow: 40 million Year 2 Free cash flow...
Given the following information:
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%
Short term investments = 50 million
Debt is currently 25 million
Preferred stock = 5 million
There are 20 million outstanding stock shares.
1. Calculate the intrinsic stock price.
2. If the current stock price was $100.00, would...
The free cash flow for the last year is $361M. The expected growth rate is 8%...
The free cash flow for the last year is $361M. The expected
growth rate is 8% for the next three years and 2.5% after that. If
WACC is 10%, estimate the value of this firm.
A. $3,821M.
B. $5,714M.
C. $6,063M.
D. $7,454M.
. What is XYZ Corp.’s 1-EBIT, 2- Net Cash Flow, 3-Operating Cash Flow, and 4-Free Cash...
. What is XYZ Corp.’s 1-EBIT, 2- Net Cash Flow, 3-Operating Cash
Flow, and 4-Free Cash Flow, given: (10 points)
XYZ Corp. (for 2020)
Revenue $10,000,000
Wages: $5,000,000
Rent (mixed space, production and administration):
$1,000,000
Selling, General, & Administrative Expenses: $3,000,000
D&A: $1,000,000
Property, Plant & Equipment investment: $1,500,000
Tax Rate: 30%
NOWC (2020): $1,000,000
NOWC (2019): $800,000
Assume no other income, expenses or cash flows.
SHOW ALL WORK
_____10. What is a futures contract? How does that compare
against...
Berzerk Motors is expected to have a free cash flow of $750,000 next year. Cash flows...
Berzerk Motors is expected to have a free cash flow of
$750,000 next year. Cash flows are expected to grow at 18 percent
per year for the next four years(years 2-5). After year 5, the free
cash flow is projected to grow at 3.5 percent indefinitely. The
firm currently has $3 million in debt, 500,000 shares outstanding,
and a WACC of 10.24%.
What is the value of Berzerk Motors?
What is the price per share of the company’s stock?
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- A)Given a generic array with ‘n’ items (not only integers). Give a solution for checking whether...
- Explain virtualization as a key technology in cloud computing environments, as well as the purpose of...
- A system is set up to take raw grading information from the console and calculate a...
- I have an 8 by 8 array that has values ranging from 1-64. I am wanting...
- The background information and instruction of the question is provided below, and i only asked for...
- Which business or industry sectors have the most startups companies that consider a small and medium...
- 16. Cost of trade credit Firms usually offer their customers some form of trade credit. This...
ADVERTISEMENT