Acme Inc. is expected to generate a free cash flow (FCF) of $5,840.00 million this year (FCF, = $5,840.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF, and FCF,). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF). Assume the firm has no nonoperating assets. If Acme Inc.'s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Acme Inc.? (Note: Round all intermediate calculations to two decimal places.) $104,842.25 million $17,626.58 million $139,176.32 million $125,810.70 million Acme Inc.'s debt has a market value of $78,632 million, and Acme Inc. has no preferred stock. If Acme Inc. has 375 million shares of common stock outstanding, what is Acme Inc.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $209.68 $68.89 $76.88 $69.89
Acme Inc. is expected to generate a free cash flow (FCF) of $5,840.00 million this year (FCF, = $5,840.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF, and FCF,). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF). Assume the firm has no nonoperating assets. If Acme Inc.'s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Acme Inc.? (Note: Round all intermediate calculations to two decimal places.) $104,842.25 million $17,626.58 million $139,176.32 million $125,810.70 million Acme Inc.'s debt has a market value of $78,632 million, and Acme Inc. has no preferred stock. If Acme Inc. has 375 million shares of common stock outstanding, what is Acme Inc.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $209.68 $68.89 $76.88 $69.89
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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Transcribed Image Text:11. More on the corporate valuation model
Acme Inc. is expected to generate a free cash flow (FCF) of $5,840.00 million this year (FCF, = $5,840.00 million), and the FCF is expected to grow at
a rate of 25.00% over the following two years (FCF, and FCF). After the third year, however, the FCF is expected to grow at a constant rate of 3.90%
per year, which will last forever (FCF). Assume the firm has no nonoperating assets. If Acme Inc.'s weighted average cost of capital (WACC) is
11.70%, what is the current total firm value of Acme Inc.? (Note: Round all intermediate calculations to two decimal places.)
0
$104,842.25 million
$17,626.58 million
$139,176.32 million
$125,810.70 million
Acme Inc.'s debt has a market value of $78,632 million, and Acme Inc. has no preferred stock. If Acme Inc. has 375 million shares of common stock
outstanding, what is Acme Inc.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal
places.)
OO
$209.68
$68.89
$76.88
$69.89
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