**Projected Free Cash Flow and Firm Valuation of ABC Telecom Inc.**ABC Telecom Inc. is projected to generate a free cash flow (FCF) of $1,910.00 million this current year. The FCF is anticipated to grow at a rate of 19.00% over the following two years. After the third year, the FCF will grow at a steady rate of 2.10% per year indefinitely.To determine the current total firm value of ABC Telecom Inc., consider that its weighted average cost of capital (WACC) is 6.30%. Follow the calculations with rounding to two decimal places.**Options for Total Firm Value:**- $6,060.06 million- $72,959.93 million- $71,811.25 million- $60,799.94 million**Evaluation of Intrinsic Value Per Share**ABC Telecom Inc. has a market debt value of $45,600 million and has no preferred stock issued. With 675 million shares of common stock outstanding, the estimated intrinsic value per share of common stock must be calculated.**Options for Intrinsic Value Per Share:**- $22.52- $67.56- $24.77- $21.52**Note:** It is essential to round all intermediate calculations to two decimal places to ensure accuracy in financial assessments.

FCF0 = $1,910.00 millionGrowth rate for 2 years = 19.00%Growth rate thereafter = 2.10%WACC =…

ABC Telecom Inc. is expected to generate a free cash flow (FCF) of $1,910.00 million this year (FCF, = $1,910.00 million), and the FCF is expected to grow at a rate of 19.00% over the following two years (FCF, and FCF). After the third year, however, the FCF is expected to grow at a constant rate of 2.10% per year, which will last forever (FCF). Assume the firm has no nonoperating assets. If ABC Telecom Inc.'s weighted average cost of capital (WACC) is 6.30%, what is the current total firm value of ABC Telecom Inc.? (Note: Round all intermediate calculations to two decimal places.) $6,060.06 million O $72,959.93 million $71,811.25 million O $60,799.94 million ABC Telecom Inc.'s debt has a market value of $45,600 million, and ABC Telecom Inc. has no preferred stock. If ABC Telecom Inc. has 675 million shares of common stock outstanding, what is ABC Telecom Inc.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $22.52 O $67.56 $24.77 O $21.52

ABC Telecom Inc. is expected to generate a free cash flow (FCF) of $1,910.00 million this year (FCF, = $1,910.00 million), and the FCF is expected to grow at a rate of 19.00% over the following two years (FCF, and FCF). After the third year, however, the FCF is expected to grow at a constant rate of 2.10% per year, which will last forever (FCF). Assume the firm has no nonoperating assets. If ABC Telecom Inc.'s weighted average cost of capital (WACC) is 6.30%, what is the current total firm value of ABC Telecom Inc.? (Note: Round all intermediate calculations to two decimal places.) $6,060.06 million O $72,959.93 million $71,811.25 million O $60,799.94 million ABC Telecom Inc.'s debt has a market value of $45,600 million, and ABC Telecom Inc. has no preferred stock. If ABC Telecom Inc. has 675 million shares of common stock outstanding, what is ABC Telecom Inc.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $22.52 O $67.56 $24.77 O $21.52

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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A new company estimates that by investing in a new process, it will increase its sales by $ 2 million one and a half years from now and a further $ 1.5 million two years from now. Assume interest rate of 18% per year, compounded semiannually. Please write formula, use compound interest table for extracting factors, show your solution step by step. a) Draw cash flow diagram b) What is the maximum amount the company can afford to spend now on the new process in order to break even? Compare PP and CP and use first method (determine effective rate per compounding period).
Calculate on Excel. And provide formula
Q1. Acme Corp. is expected to generate a free cash flow (FCF) of $9,080.00 million this year (FCF₁ = $9,080.00 million), and the FCF is expected to grow at a rate of 26.20% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 4.26% per year, which will last forever (FCF₄). Assume the firm has no non-operating assets. If Acme Corp.’s weighted average cost of capital (WACC) is 12.78%, what is the current total firm value of Acme Corp.? (Note: Round all intermediate calculations to two decimal places.) a. $150,504.74 million b. $27,141.27 million c. $204,104.42 million d. $180,605.69 million Q2. Acme Corp.’s debt has a market value of $112,879 million, and Acme Corp. has no preferred stock. If Acme Corp. has 225 million shares of common stock outstanding, what is Acme Corp.’s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two…
Consider the case of Flying Cow Aviation Inc.: Flying Cow Aviation Inc. is expected to generate a free cash flow (FCF) of $1,180,000 this year, and the FCF is expected to grow at a rate of 14% over the following two years (FCF22 and FCF33). After the third year, however, the company’s FCFs are expected to grow at a constant rate of 6% per year, which will last forever (FCF4 - ∞4 - ∞). If Flying Cow’s weighted average cost of capital (WACC) is 12%, complete the following table and compute the current value of Flying Cow’s operations. Round all dollar amounts to the nearest whole dollar, and assume that the firm does not have any nonoperating assets in its balance sheet and that all FCFs occur at the end of each year. Year CFtt PV(FCFtt) FCF11 $1,180,000 FCF22 FCF33 FCF44 Horizon Value4- ∞4- ∞ Vopop = Flying Cow’s debt has a market value of $16,875,959, and Flying Cow has no preferred stock in its…
Globex Corp. is expected to generate a free cash flow (FCF) of $145.00 million this year (FCF₁ = $145.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF2 and FCF3). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF4). Assume the firm has no nonoperating assets. If Globex Corp.'s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Globex Corp.? (Note: Round all intermediate calculations to two decimal places.) O $2,603.11 million O $3,123.73 million O $437.64 million O $3,455.59 million Globex Corp.'s debt has a market value of $1,952 million, and Globex Corp. has no preferred stock. If Globex Corp. has 375 million shares of common stock outstanding, what is Globex Corp.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) O $1.74 O $0.74 $1.91
Kinkead Inc. forecasts that its free cash flow in the coming year, i.e., at t = 1, will be -$18 million, but its FCF at t = 2 will be $40 million. After Year 2, FCF is expected to grow at a constant rate of 5% forever. If the weighted average cost of capital is 14%, what is the firm's value of operations, in millions? Year: 1 2 Free cash flow: ($18) $40 (Round your answer to 2 decimal places.)
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A new company estimates that by investing in a new process, it will increase its sales by $2.5 million one year from now and a further $1 million one and half year from now. Assume interest rate of 16% per year, compounded semiannually. Please write formula, use compound interest table for extracting factors, show your solution step by step. a) Draw cash flow diagram b) What is the maximum amount the company can afford to spend now on the new process in order to break even? Compare PP and CP and use first method (determine effective rate per compounding period).
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