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13. Use the following information on Stock X to find the price of a share of stock using the free-cash flow. Assume the annual growth is 4.0% and the WACC is 7.0%. The financial statements below are on Moodle for Exam 2 in case you want to use those to practice-prepare for this question. Answer: Financial Statements at the end of Year Income Statement Sales COGS Gross Profits Depreciation EBIT Interest End of Year 1 $ 68,000.00 $ 45,800.00 $ 22,200.00 $ 1,000.00 $ 21,200.00 $ 97.50 $ 21,102.50 $ 6,330.75 $ 14,771.75 $ Change in Retained Earnings $ 14,771.75 Income Before Taxes Taxes (30%) Net Income Dividends AAAA Balance Sheet Assets Begin. of Year 1 End of Year 1 Llabilities Begin. of Year 1 End of Year 1 Cash $ Inventories $ Net fixed assets $ 5,000.00 $ 6,000.00 $ 28,000.00 $ 10,571.75 4,200.00 39,000.00 Total Assets $ 39,000.00 $ 53,771.75 Notes payable Long term debt Initial paid in capital $ Retained earnings $ Tot. Llab. & Equity $ 1,950.00 $ 37,050.00 $ $ $ 39,000.00 $ 1,950.00 37,050.00 14,771.75 53,771.75

13. Use the following information on Stock X to find the price of a share of stock using the free-cash flow. Assume the annual growth is 4.0% and the WACC is 7.0%. The financial statements below are on Moodle for Exam 2 in case you want to use those to practice-prepare for this question. Answer: Financial Statements at the end of Year Income Statement Sales COGS Gross Profits Depreciation EBIT Interest End of Year 1 $ 68,000.00 $ 45,800.00 $ 22,200.00 $ 1,000.00 $ 21,200.00 $ 97.50 $ 21,102.50 $ 6,330.75 $ 14,771.75 $ Change in Retained Earnings $ 14,771.75 Income Before Taxes Taxes (30%) Net Income Dividends AAAA Balance Sheet Assets Begin. of Year 1 End of Year 1 Llabilities Begin. of Year 1 End of Year 1 Cash $ Inventories $ Net fixed assets $ 5,000.00 $ 6,000.00 $ 28,000.00 $ 10,571.75 4,200.00 39,000.00 Total Assets $ 39,000.00 $ 53,771.75 Notes payable Long term debt Initial paid in capital $ Retained earnings $ Tot. Llab. & Equity $ 1,950.00 $ 37,050.00 $ $ $ 39,000.00 $ 1,950.00 37,050.00 14,771.75 53,771.75

Essentials Of Investments
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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13. Use the following information on Stock X to find the price of a share of stock using the free-cash flow. Assume the annual growth is 4.0% and the WACC is 7.0%. The financial statements below are on Moodle for Exam 2 in case you want to use those to practice-prepare for this question. Answer: Financial Statements at the end of Year Income Statement Sales COGS Gross Profits Depreciation EBIT Interest End of Year 1 $ 68,000.00 $ 45,800.00 $ 22,200.00 $ 1,000.00 $ 21,200.00 $ 97.50 $ 21,102.50 $ 6,330.75 $ 14,771.75 $ Change in Retained Earnings $ 14,771.75 Income Before Taxes Taxes (30%) Net Income Dividends AAAA Balance Sheet Assets Begin. of Year 1 End of Year 1 Llabilities Begin. of Year 1 End of Year 1 Cash $ Inventories $ Net fixed assets $ 5,000.00 $ 6,000.00 $ 28,000.00 $ 10,571.75 4,200.00 39,000.00 Total Assets $ 39,000.00 $ 53,771.75 Notes payable Long term debt Initial paid in capital $ Retained earnings $ Tot. Llab. & Equity $ 1,950.00 $ 37,050.00 $ $ $ 39,000.00 $ 1,950.00 37,050.00 14,771.75 53,771.75
Transcribed Image Text:13. Use the following information on Stock X to find the price of a share of stock using the free-cash flow. Assume the annual growth is 4.0% and the WACC is 7.0%. The financial statements below are on Moodle for Exam 2 in case you want to use those to practice-prepare for this question. Answer: Financial Statements at the end of Year Income Statement Sales COGS Gross Profits Depreciation EBIT Interest End of Year 1 $ 68,000.00 $ 45,800.00 $ 22,200.00 $ 1,000.00 $ 21,200.00 $ 97.50 $ 21,102.50 $ 6,330.75 $ 14,771.75 $ Change in Retained Earnings $ 14,771.75 Income Before Taxes Taxes (30%) Net Income Dividends AAAA Balance Sheet Assets Begin. of Year 1 End of Year 1 Llabilities Begin. of Year 1 End of Year 1 Cash $ Inventories $ Net fixed assets $ 5,000.00 $ 6,000.00 $ 28,000.00 $ 10,571.75 4,200.00 39,000.00 Total Assets $ 39,000.00 $ 53,771.75 Notes payable Long term debt Initial paid in capital $ Retained earnings $ Tot. Llab. & Equity $ 1,950.00 $ 37,050.00 $ $ $ 39,000.00 $ 1,950.00 37,050.00 14,771.75 53,771.75
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