Demo Inc. is expected to generate a free cash flow (FCF) of $8,715.00 million this year (FCF₁ = $8,715.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF2 and FCFs). 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 Demo Inc.'s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Demo Inc.? (Note: Round all intermediate calculations to two decimal places.) $156,455.46 million $26, 304.04 million $207,691.99 million $187,746.55 million Demo Inc.'s debt has a market value of $117,342 million, and Demo Inc. has no preferred stock. If Demo Inc. has 600 million shares of common stock outstanding, what is Demo Inc.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $64.19 $71.71 $ 65.19 $195.57

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
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Demo Inc. is expected to generate a free cash flow (FCF) of $8,715.00 million this year (FCF1 = $8,715.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two
years (FCF2 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 (FCF4). Assume the firm has no nonoperating assets. If
Demo Inc.'s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Demo Inc.? (Note: Round all intermediate calculations to two decimal places.) $156,455.46
million $26,304.04 million $207,691.99 million $187,746.55 million Demo Inc.'s debt has a market value of $117,342 million, and Demo Inc. has no preferred stock. If Demo Inc. has 600 million
shares of common stock outstanding, what is Demo Inc.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $64.19 $71.71 $
65.19 $195.57
Transcribed Image Text:Demo Inc. is expected to generate a free cash flow (FCF) of $8,715.00 million this year (FCF1 = $8,715.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF2 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 (FCF4). Assume the firm has no nonoperating assets. If Demo Inc.'s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Demo Inc.? (Note: Round all intermediate calculations to two decimal places.) $156,455.46 million $26,304.04 million $207,691.99 million $187,746.55 million Demo Inc.'s debt has a market value of $117,342 million, and Demo Inc. has no preferred stock. If Demo Inc. has 600 million shares of common stock outstanding, what is Demo Inc.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $64.19 $71.71 $ 65.19 $195.57
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