Allied Biscuit Co. is expected to generate a free cash flow (FCF) of $7,795.00 million this year (FCF, =$7,795.00 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 Allied BiscuitCo.'s weighted average cost of capital (WACC) is 6.30 %, what is the current total firm value of AlliedBiscuit Co. ? (Note: Round all intermediate calculations to two decimal places.) $293,072.74 million $24,732.03 million $297,760.66 million $248, 133.88 million

Step 1: Calculate the FCF for the next three years.FCF1 = $7,795.00 millionFCF2 = $7,795.00 million…

Answered: Allied Biscuit Co. is expected to…

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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The expected Cash Flow From Assets of The Skate Shop for the next two years are $208,000 and $218,000 respectively. After these two years, the growth rate of these cash flows will be a constant 4.7% per year.Assuming a discount rate of 9.7%, what is the present value of the terminal value of this firm?
Lex Corp. is expected to generate a free cash flow (FCF) of $4,555.00 million this year (FCF, = $4,555.00 million), and the FCF is expected to grow at a rate of 21.40% over the following two years (FCF, and FCF,). After the third year, however, the FCF is expected to grow at a constant rate of 2.82% per year, which will last forever (FCF.). Assume the firm has no nonoperating assets. If Lex Corp.'s weighted average cost of capital (WACC) is 8.46%, what is the current total firm value of Lex Corp.? (Note: Round all intermediate calculations to two decimal places.) $132,100.10 million $110,083.42 million O $14,162.05 million O $136,545.92 million Lex Corp.'s debt has a market value of $82,563 million, and Lex Corp. has no preferred stock. If Lex Corp. has 525 million shares of common stock outstanding, what is Lex Corp.'s estimated Intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) O $157.26 O $57.66 O $51.42 O $52.42
You are building a free cash flow to the firm model. You expect sales to grow from $2 billion for the year that just ended to $2.2 billion five years from now. Assume that the company will not become any more or less efficient in the future. Assume that the company will grow at a constant rate for 5 years, and then at a constant rate of 1.424488% for year 6 and onward after that. Use the following information to calculate the value of the equity on a per-share basis. a. Assume that the company currently has $660 million of net PP&E. b. The company currently has $220 million of net working capital. c. The company has operating margins of 12 percent and has an effective tax rate of 28 percent. d. The company has a weighted average cost of capital of 10 percent. This is based on a capital structure of two-thirds equity and one-third debt. e. The firm has 2 million shares outstanding. A Do not round intermediate calculations. Round your answer to the nearest cent
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You are building a free cash flow to the firm model. You expect sales to grow from $1.6 billion for the year that just ended to $1.84 billion five years from now. Assume that the company will not become any more or less efficient in the future. Assume that the company will grow at a constant rate for 5 years, and then at a constant rate of 2.334672% for year 5 and onward after that. Use the following information to calculate the value of the equity on a per-share basis. a. Assume that the company currently has $528 million of net PPSE. b. The company currently has $176 million of net working capital. c. The company has operating margins of 10 percent and has an effective tax rate of 30 percent. d. The company has a weighted average cost of capital of 9 percent. This is based on a capital structure of two-thirds equity and one-third debt. e. The firm has 2 million shares outstanding. Do not round intermediate calculations. Round your answer to the nearest cent. S

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