HCB, Inc.'s financial partial statements are shown below. HCB Income Statement 2021 Sales 2,000.0 Assets 2021 Cash 86.0 Accounts receivable 360.0 Inventory 320.0 Short-term investments 223.0 Total current assets 989.0 Net fixed assets 1,940.0 Total assets 2,929.0 Liabilities and equity 2021 Accounts payable 200.0 Accruals 240.0 Short-term debt 292.9 Total current liabilities 732.9 Long-term debt 1,757.4 Total liabilities 2,490.3 Par + paid in capital less treasury 238.7 Retained earnings 200.0 Total shareholder equity 438.7 Total liabilities and S.E. 2,929.0 Tax rate: 25% WACC 9% Required return on stock, rs 11% rSU Unlevered required return on stock 10% Long-term growth rate 6% Free cash flows for the following years are forecast to be: Year 2022 2023 2024 FCF 62.00 74.40 81.80 Using the Corporate Valuation Model, calculate the intrinsic value of equity. *a. $587.18 - correct answer b. $645.90 c. $710.49 d. $781.54 e. $859.69 DO NOT USE EXCEL
HCB, Inc.'s financial partial statements are shown below.
HCB Income Statement 2021
Sales 2,000.0
Assets 2021
Cash 86.0
Accounts receivable 360.0
Inventory 320.0
Short-term investments 223.0
Total current assets 989.0
Net fixed assets 1,940.0
Total assets 2,929.0
Liabilities and equity 2021
Accounts payable 200.0
Accruals 240.0
Short-term debt 292.9
Total current liabilities 732.9
Long-term debt 1,757.4
Total liabilities 2,490.3
Par + paid in capital less treasury 238.7
Total shareholder equity 438.7
Total liabilities and S.E. 2,929.0
Tax rate: 25%
WACC 9%
Required return on stock, rs 11%
rSU Unlevered required return on stock 10%
Long-term growth rate 6%
Year 2022 2023 2024
FCF 62.00 74.40 81.80
Using the Corporate Valuation Model, calculate the intrinsic value of equity.
*a. $587.18 - correct answer
b. $645.90
c. $710.49
d. $781.54
e. $859.69
DO NOT USE EXCEL
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