The following forecasts were developed at the end of 2022 for Endless Sunny Days (ESD), a company thathas a cost of capital for its operations of 8% and a cost of capital for its equity of 12% (amounts are inmillions of dollars):Cash flow from operations2023E135952024E2151652025E270125Cash investment expenditureAt the end of 2022, the book value of equity was $370 and the net financing debt was $360.1. Forecast Free Cash Flows for 2023, 2024 and 2025.2. Calculate the present value of Forecast Free Cash Flows for 2023, 2024 and 2025.3. Using a terminal growth rate in free cash flow after 2025 of 1%, calculate the present value of cash flowsto be received in the terminal period.4. Using your answers to previous questions, estimate the total market value of equity for the firm.

The formula to determine the Free Cash Flow is as below: FCF = Cash flow from operations - Cash…

1. Forecast Free Cash Flows for 2023, 2024 and 2025. 2. Calculate the present value of Forecast Free Cash Flows for 2023, 2024 and 2025. Using a terminal growth rate in free cash flow after 2025 of 1%, calculate the present value of cash flows to be received in the terminal period. Using your answers to previous questions, estimate the total market value of equity for the firm.

1. Forecast Free Cash Flows for 2023, 2024 and 2025. 2. Calculate the present value of Forecast Free Cash Flows for 2023, 2024 and 2025. Using a terminal growth rate in free cash flow after 2025 of 1%, calculate the present value of cash flows to be received in the terminal period. Using your answers to previous questions, estimate the total market value of equity for the firm.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Consider the table given below to answer the following question. Year Asset value Earnings Net investment Free cash flow Return on equity Asset growth rate Earnings growth rate 1 9.00 1.44 1.44 0.00 0.16 0.16 Present value 2 10.44 1.67 1.67 0.00 0.16 0.16 0.16 million 3 4 5 12.11 14.05 15.87 1.94 2.54 2.25 1.94 1.83 2.06 0.00 0.42 0.48 0.16 0.16 0.16 0.16 0.13 0.13 0.16 0.16 0.13 6 7 17.94 20.27 2.78 2.33 0.45 0.155 0.13 0.09 3.04 2.03 1.01 0.15 0.10 0.09 8 9 22.30 24.53 3.23 2.94 2.23 2.45 1.00 0.49 0.145 0.12 0.10 0.10 0.06 -0.09 Assuming that competition drives down profitability (on existing assets as well as new investment) to 15.5% in year 6, 15% in year 7, 14.5% in year 8, and 12% in year 9 and all later years. What is the value of the concatenator business? Assume 13% cost of capital. Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. 10 26.98 3.24 2.70 0.54 0.12 0.10 0.10
Dear Bartleby, I need help calculating the dividend yield e. If Wiper's stock had a price/earnings ratio of 14 at the end of 2020, what was the market price of the stock? (Round intermediate calculations and final answer to 2 decimal places.)f. Calculate the cash dividend per share for 2020 and the dividend yield based on the market price calculated in part e. (Round intermediate calculations and final answers to 2 decimal places. Presented here are summarized data from the balance sheets and income statements of Wiper Inc.: WIPER INC. Condensed Balance Sheets December 31, 2020, 2019, 2018 (in millions) 2020 2019 2018 Current assets $ 650 $ 900 $ 700 Other assets 2,750 2,050 1,750 Total assets $ 3,400 $ 2,950 $ 2,450 Current liabilities $ 500 $ 800 $ 700 Long-term liabilities 1,500 1,000 800 Stockholders' equity 1,400 1,150 950 Total liabilities and stockholders' equity $ 3,400 $ 2,950 $ 2,450…
Consider the table given below to answer the following question. Asset value Earnings Net investment Free cash flow (FCF) Return on equity (ROE) Asset growth rate Earnings growth rate Present value 1 2 3 4 5 6 7 8 9.00 10.17 11.49 12.99 14.28 15.71 17.28 18.49 1.17 1.32 1.49 1.69 1.86 1.96 2.07 2.13 1.17 1.32 1.49 1.30 1.43 1.57 1.21 1.29 0.39 0.43 0.39 0.86 0.83 0.13 0.13 0.13 0.125 0.12 0.115 0.13 0.10 0.10 0.10 0.07 0.07 0.13 0.13 0.10 0.06 0.06 0.03 0.13 0.13 0.13 0.13 0.13 Year Assuming that competition drives down profitability (on existing assets as well as new investment) to 12.5% in year 6, 12% in year 7, 11.5% in year 8, and 9% in year 9 and all later years. What is the value of the concatenator business? Assume 12% cost of capital. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) million
2. Assume that today is December 31, 2021 and you need to determine the firm value of CoolTech, Inc. You have decided to apply the free cash flow valuation model to the firm's financial data that you've developed from a variety of data sources. The key values you have compiled are summarized in the following table: Free Cash Flow Year FCF Other Data Growth rate of FCF, beyond 2025 to infinity = 3% Weighted average cost of capital = 8% 700,000 800,000 950,000 980,000 2022 %3D 2023 %3D 2024 2025 What is the value of the entire CoolTech's entire company? + Factac F%
The cost of equity and dividends are known to the picture.calculate the value of Ve, according to the multi-period dividend discount model
39: Using the following closing prices and dividends compute the CWI (cumulative wealth index), the CPC (cumulative price change) and the CDY (cumulative dividend yield). Assume an initial investment of $1. Indicate your answer clearly. You must show your work to receive credit. Period 0 1 2 Index Value 50 60 54 Dividend 1.00 1.20
Provide Answer with calculation and explanation
Please show the solution in excel format :) thank you
Answer of the question immediately please
A stock is selling today for $50 per share. At the end of the year, it pays a dividend of $3 per share and sells for $59. Required: a. What is the total rate of return on the stock? b. What are the dividend yield and percentage capital gain? c. Now suppose the year-end stock price after the dividend is paid is $44. What are the dividend yield and percentage capital gain in this case?
Can you please answer this part c follow up question: c) Suppose the initial £90,000 is raised by borrowing at the risk-free interest rateinstead of issuing equity. What are the cash flows to equity and debt holders, andwhat is the initial value of the levered equity according to Modigliani and Miller’sPropositions? Is the company’s cost of equity the same as before? Overall, can thecompany raise the same amount of capital as before? Explain your reasoning.
An analyst is studying the company LEMO in order to make an investment decision. The investor's estimates of Free Cash Flows to Firm (FCF), levels of debt and net Financial Expenses (FE) of the company are presented in Table 1. Table 1 Year 2020 Year 2021 | Year 2022 | Year 2023 Year 2024 Year 2025 FCF €10000 €11300 €10950 €12500 €12750 Level of €1000 €1200 €1450 €1350 €1600 €1675 debt FE €70 €90 €100 €108 €115 Additionally, the analyst has made the following assumptions: (i) risk-free interest rate: 1.5 %; (i) target capital structure: debt/(debt + equity) ratio of 45%; (ii) equity risk premium: 6%; (iv) asset beta: 1.15; and (v) tax rate: 20%. The number of shares of the company is 1 2000 and the current market price of LEMO is €8.0 per share. Present your result rounded to one decimal place. a. Compute the yearly Equity Free Cash Flows (EFCF) for the period from 2021 until 2025. Explain your answer. b. Assume the expected nominal growth rate of the EFCF in perpetuity is 1.25%.…

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