Galaxy Corp. is expected to generate a free cash flow (FCF) of $6,430.00 million this year (FCF₁ = $6,430.00 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 Galaxy Corp.’s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Galaxy Corp.? (Note: Round all intermediate calculations to two decimal places.) $153,236.96 million $115,434.20 million $19,407.34 million $138,521.04 million Galaxy Corp.’s debt has a market value of $86,576 million, and Galaxy Corp. has no preferred stock. If Galaxy Corp. has 450 million shares of common stock outstanding, what is Galaxy Corp.’s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $64.13 $192.39 $70.54 $63.13
Galaxy Corp. is expected to generate a free cash flow (FCF) of $6,430.00 million this year (FCF₁ = $6,430.00 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 Galaxy Corp.’s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Galaxy Corp.? (Note: Round all intermediate calculations to two decimal places.) $153,236.96 million $115,434.20 million $19,407.34 million $138,521.04 million Galaxy Corp.’s debt has a market value of $86,576 million, and Galaxy Corp. has no preferred stock. If Galaxy Corp. has 450 million shares of common stock outstanding, what is Galaxy Corp.’s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $64.13 $192.39 $70.54 $63.13
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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Question
Galaxy Corp. is expected to generate a free cash flow (FCF) of $6,430.00 million this year (FCF₁ = $6,430.00 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 Galaxy Corp.’s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Galaxy Corp.? (Note: Round all intermediate calculations to two decimal places.)
$153,236.96 million
$115,434.20 million
$19,407.34 million
$138,521.04 million
Galaxy Corp.’s debt has a market value of $86,576 million, and Galaxy Corp. has no preferred stock . If Galaxy Corp. has 450 million shares of common stock outstanding, what is Galaxy Corp.’s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.)
$64.13
$192.39
$70.54
$63.13
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