Marcus LLC reported net income of $800 million in 2022, after interest expenses of $300 million (the corporate tax rate was 21%). It reported depreciation of $960 million in that year, and capital spending was $1.2 billion. The firm also $4 billion in debt outstanding on the books, rated AA (carrying a yield to maturity of 6%), trading at par (up from $3.8 billion at the end 0f 2021). The beta of the stock is 1.05, and there were 200 million shares outstanding (trading $60 per share), with a book value of $5 billion. Marcus LLC paid 40% of its earning as dividends and working capital requirements are negligible. The treasury bond rate 3%. The expected market risk premium is 5.5%. Estimate the free cash flow to the firm in 2022. Estimate the value of the firm at the end of 2022. Estimate the value of the equity at the end 2022, and the value per share, using the FCFF approach.
Marcus LLC reported net income of $800 million in 2022, after interest expenses of $300 million (the corporate tax rate was 21%). It reported
Estimate the
Estimate the value of the firm at the end of 2022.
Estimate the value of the equity at the end 2022, and the value per share, using the FCFF approach.
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