Excel Activity: Free Cash Flow Valuation Model Start with the partial model in the file Ch08 P25 Build a Model.xlsx. Selected data for the Derby Corporation are shown here. Use the data to answer the questions. INPUTS (In Millions) Year Current Projected 0 1 Free cash flow -$25.0 2 3 $25.0 4 $90.0 $97.2 Marketable securities $ 70 Notes payable $ 180 Long-term bonds Preferred stock $ 720 $ 90 WACC Number of shares of stock 12.00% 40 The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations. X Download spreadsheet Ch08 P25 Build a Model-2f9dc6.xlsx a. Calculate the estimated horizon value (i.e., the value of operations at the end of the forecast period immediately after the Year-4 free cash flow). Assume growth becomes constant after Year 3. Enter your answer in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answer to two decimal places. $ million b. Calculate the present value of the horizon value, the present value of the free cash flows, and the estimated Year-0 value of operations. Enter your answers in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answers to two decimal places. Present value of HV $ Present value of FCF Value of operations $ million million million c. Calculate the estimated Year-0 price per share of common equity. Round your answer to the nearest cent. $
Excel Activity: Free Cash Flow Valuation Model Start with the partial model in the file Ch08 P25 Build a Model.xlsx. Selected data for the Derby Corporation are shown here. Use the data to answer the questions. INPUTS (In Millions) Year Current Projected 0 1 Free cash flow -$25.0 2 3 $25.0 4 $90.0 $97.2 Marketable securities $ 70 Notes payable $ 180 Long-term bonds Preferred stock $ 720 $ 90 WACC Number of shares of stock 12.00% 40 The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations. X Download spreadsheet Ch08 P25 Build a Model-2f9dc6.xlsx a. Calculate the estimated horizon value (i.e., the value of operations at the end of the forecast period immediately after the Year-4 free cash flow). Assume growth becomes constant after Year 3. Enter your answer in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answer to two decimal places. $ million b. Calculate the present value of the horizon value, the present value of the free cash flows, and the estimated Year-0 value of operations. Enter your answers in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answers to two decimal places. Present value of HV $ Present value of FCF Value of operations $ million million million c. Calculate the estimated Year-0 price per share of common equity. Round your answer to the nearest cent. $
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:Excel Activity: Free Cash Flow Valuation Model
Start with the partial model in the file Ch08 P25 Build a Model.xlsx. Selected data for the Derby Corporation are shown here. Use the data to answer the questions.
INPUTS (In Millions)
Year
Current
Projected
0
1
Free cash flow
-$25.0
2 3
$25.0
4
$90.0
$97.2
Marketable securities
$ 70
Notes payable
$ 180
Long-term bonds
Preferred stock
$ 720
$
90
WACC
Number of shares of stock
12.00%
40
The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations.
X
Download spreadsheet Ch08 P25 Build a Model-2f9dc6.xlsx
a. Calculate the estimated horizon value (i.e., the value of operations at the end of the forecast period immediately after the Year-4 free cash flow). Assume growth becomes constant after Year 3. Enter your answer in millions. For example, an answer of
$1.23 million should be entered as 1.23, not 1,230,000. Round your answer to two decimal places.
$
million
b. Calculate the present value of the horizon value, the present value of the free cash flows, and the estimated Year-0 value of operations. Enter your answers in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000.
Round your answers to two decimal places.
Present value of HV
$
Present value of FCF
Value of operations
$
million
million
million
c. Calculate the estimated Year-0 price per share of common equity. Round your answer to the nearest cent.
$
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