Luthor Corp. is expected to generate a free cash flow (FCF) of $14,950.00 million this year (FCF: = $14,950.00 million), and the FCF is expected to grow at a rate of 23.80% over the following two years (FCF2 and FCF3). After the third year, however, the FCF is expected to grow at a constant rate of 3.54% per year, which will last forever (FCF4). Assume the firm has no nonoperating assets. If Luthor Corp.'s weighted average cost of capital (WACC) is 10.62%, what is the current total firm value of Luthor Corp.? (Note: Round all intermediate calculations to two decimal places.) O $45,566.77 million O $351,735.68 million O $380,653.63 million O $293,113.07 million Luthor Corp.'s debt has a market value of $219,835 million, and Luthor Corp. has no preferred stock. If Luthor Corp. has 150 million shares of common stock outstanding, what is Luthor Corp.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) O $488.52 O $1,465.57 O $487.52 O $537.37
Luthor Corp. is expected to generate a free cash flow (FCF) of $14,950.00 million this year (FCF: = $14,950.00 million), and the FCF is expected to grow at a rate of 23.80% over the following two years (FCF2 and FCF3). After the third year, however, the FCF is expected to grow at a constant rate of 3.54% per year, which will last forever (FCF4). Assume the firm has no nonoperating assets. If Luthor Corp.'s weighted average cost of capital (WACC) is 10.62%, what is the current total firm value of Luthor Corp.? (Note: Round all intermediate calculations to two decimal places.) O $45,566.77 million O $351,735.68 million O $380,653.63 million O $293,113.07 million Luthor Corp.'s debt has a market value of $219,835 million, and Luthor Corp. has no preferred stock. If Luthor Corp. has 150 million shares of common stock outstanding, what is Luthor Corp.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) O $488.52 O $1,465.57 O $487.52 O $537.37
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:11. More on the corporate valuation model
Luthor Corp. is expected to generate a free cash flow (FCF) of $14,950.00 million this year (FCF: = $14,950.00 million), and the FCF is expected to
grow at a rate of 23.80% over the following two years (FCF2 and FCF3). After the third year, however, the FCF is expected to grow at a constant rate
of 3.54% per year, which will last forever (FCFa). Assume the firm has
nonoperating assets. If Luthor Corp.'s weighted average cost of capital
(WACC) is 10.62%, what is the current total firm value of Luthor Corp.? (Note: Round all intermediate calculations to two decimal places.)
$45,566.77 million
O $351,735.68 million
$380,653.63 million
O $293,113.07 million
Luthor Corp.'s debt has a market value of $219,835 million, and Luthor Corp. has no preferred stock. If Luthor Corp. has 150 million shares of
common stock outstanding, what is Luthor Corp.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to
two decimal places.)
O $488.52
$1,465.57
$487.52
O $537.37
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