Provide solution for this question A firm's most recent free cash flow (FCFO) was $8.00million. FCFS are expected to grow 6% a year. Thefirm's cost of equity is 11% and its WACC is 9%. Thefirm has $217.33 million in non-operating assets, $50million in long term debt outstanding, $50 million inpreferred stock, and 80 million shares outstanding.1) What is the firm's expected value of operationstoday?2) Estimate the intrinsic value of a share of the firm'sstock.3) What is the firm's expected value of operations 4years from now?

Given DataMost Recent Free Cash Flow (FCFO): $8.00 millionExpected Growth Rate (g): 6% (0.06)Cost of…

Answered: A firm's most recent free cash flow…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 1P: Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1...

See similar textbooks

Similar questions

Need help
A company is projected to generate free cash flows of $457 million next year, growing at a 4.4% rate until the end of year 3. After that, cash flows are expected to grow at a stable rate of 2.8%. The company's cost of capital is 10.1%. The company owes $268 million to lenders and has $24 million in cash. If it has 179 million shares outstanding, what is your estimate for its share value? Round to one decimal place.
A company is projected to generate free cash flows of $329 million next year, growing at a 5.7% rate until the end of year 3. After that, cash flows are expected to grow at a stable rate of 2.1%. The company's cost of capital is 13.3%. The company owes $171 million to lenders and has $37 million in cash. If it has 114 million shares outstanding, what is your estimate for its share value? Round to one decimal place. Type your numeric answer and submit
A company is projected to have a free cash flow of $243 million next year, growing at a 5.6% rate until the end of year 3. After that, cash flows are expected to grow at a stable rate of 2.1%. The company's cost of capital is 12.7%. The company owes $71 million to lenders and has $17 million in cash. If it has 221 million shares outstanding, what is your estimate for its stock price? Round to one decimal place.
A firm expects to generate $100 million in free cash flow in a year. This free cash flow is expected to grow at a constant annual rate of 5%. The firm has a 19% cost of capital, $366 million of debt, and 20 million shares of common stock outstanding. Compute the value of the firm. (show your answers in millions - example, $10,000,000 would be entered as 10)
A firm will have cash flows of $100 million next year, and cash flows of $112 million, $126 million, $129 million and $140 million in years 2-5. Cash flows after that will grow at a constant rate of 3%. The WACC for the firm is 13% and the firm has $300 million in debt and preferred stock combined, along with $52 million in short-term investments. If the firm has 6 million shares of stock, what is the current share price?
A firm expects to generate $100 million in free cash flow in a year. This free cash flow is expected to grow at a constant annual rate of 5%. The firm has a 20% cost of capital, $300 million of debt, and 20 million shares of common stock outstanding. Compute the value of the firm's common stock (to the nearest dollar).
Majong Inc. forecasts that it will have the free cash flows shown below. The free cash flows are expected to grow by 5% per year after year 3. Year 1 2 3 CF (S million) - 20 48 54 The weighted average cost of capital is 13%. The firm has $55 million of debt and 10 million shares outstanding. What is the firm value today (in $ million)? What is a good estimate of Majong's value per share?
The most recent free cash flows of a firm were $15 million. They are expected to grow at a constant rate of 5% forever. The firm has $60 million in debt, $6 million in preferred stock, and $10 million in marketable securities WACC is 10%. The firm has 10 million shares of stock outstanding. What would the market price per share for this firm be? A $23.90 B $27.10 C. $24.90 D.$26.10
A firm is expected to have free cash flows of $50 million this year (FCF1=$50m). Free cash flows are expected to grow by 6% per year. For a firm whose WACC is 12%, what is the value of a share of common stock if the firm has $500 million of total debt, no preferred stock, and 8 million common shares outstanding?
King Messi Corp. is expected to have $20 earnings before interest and taxes every year in perpetuity and a tax rate of 20%. The firm is financed with $100 in debt and the remainder with equity. The firm’s cost of debt is 5%. Its earnings after taxes are expected to be fully paid out as dividends. Based on this information, what is the total cash flow to debt and equity holders? Answers: 16 17 18 19 20
Sora Industries has 62 million outstanding shares, $124 million in debt, $47 million in cash, and the following projected free cash flow for the next four years: a. Suppose Sora's revenue and free cash flow are expected to grow at a 3.6% rate beyond year four. If Sora's weighted average cost of capital is 14.0%, what is the value of Sora stock based on this information? b. Sora's cost of goods sold was assumed to be 67% of sales. If its cost of goods sold is actually 70% of sales, how would the estimate of the stock's value change? c. Return to the assumptions of part (a) and suppose Sora can maintain its cost of goods sold at 67% of sales. However, the firm reduces its selling, general, and administrative expenses from 20% of sales to 16% of sales. What stock price would you estimate now? (Assume no other expenses, except taxes, are affected.) d. Sora's net working capital needs were estimated to be 18% of sales (their current level in year zero). If Sora can reduce this requirement…

SEE MORE QUESTIONS

Recommended textbooks for you

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

SEE MORE TEXTBOOKS