Phoenix Corp. faltered in the recent recession but is recovering. Free cash flow has grownrapidly. Forecasts made in 2019 are as follows:($ millions)Net incomeInvestmentFree cash flow20201.01.002021 20222.54.21.51.71.02.520234.701.92.820245.01.93.1Phoenix's recovery will be complete by 2024, and there will be no further growth in netincome or free cash flow.a) Calculate the PV of free cash flow, assuming a cost of equity of 10%.b) Assume that Phoenix has 12 million shares outstanding. What is the price per share?

Value of the firm on 2024 = 3.1 / 0.1 = 31 millionYearFree cash flowPV factor @ 10%Present value…

Phoenix Corp. faltered in the recent recession but is recovering. Free cash flow has grown rapidly. Forecasts made in 2019 are as follows: ($ millions) Net income Investment Free cash flow 2020 1.0 1.0 0 2021 2022 2.5 4.2 1.5 1.7 1.0 2.5 2023 2024 4.70 5.0 1.9 1.9 2.8 3.1 Phoenix's recovery will be complete by 2024, and there will be no further growth in net income or free cash flow. a) Calculate the PV of free cash flow, assuming a cost of equity of 10%. b) Assume that Phoenix has 12 million shares outstanding. What is the price per share?

Phoenix Corp. faltered in the recent recession but is recovering. Free cash flow has grown rapidly. Forecasts made in 2019 are as follows: ($ millions) Net income Investment Free cash flow 2020 1.0 1.0 0 2021 2022 2.5 4.2 1.5 1.7 1.0 2.5 2023 2024 4.70 5.0 1.9 1.9 2.8 3.1 Phoenix's recovery will be complete by 2024, and there will be no further growth in net income or free cash flow. a) Calculate the PV of free cash flow, assuming a cost of equity of 10%. b) Assume that Phoenix has 12 million shares outstanding. What is the price per share?

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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The following is a four-year forecast for Torino Marine. Year Free cash flow ($ millions) 2022 -63 a. Fair market value b. Fair market value per share 2023 84 2024 101 a. Estimate the fair market value of Torino Marine at the end of 2021. Assume that after 2025, earnings before interest and tax will remain constant at $200 million, depreciation will equal capital expenditures in each year, and working capital will not change. Torino Marine's weighted-average cost of capital is 9 percent and its tax rate is 20 percent. Note: Do not round intermediate calculations. Enter your answer in millions rounded to 1 decimal place. million 2025 123 b. Estimate the fair market value per share of Torino Marine's equity at the end of 2021 if the company has 48 million shares outstanding and the market value of its interest-bearing liabilities on the valuation date equals $380 million. Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
9
The most recent financial statements for xyz inc. follow. Sales for 2019 are projected to grow by 22 percent. Interest expense will remain constant, the tax rate and dividend payout rate will also remain constant. Costs, other expenses, current assets, and accounts payable increase spontaneously with sales. If the firm is operating at full capacity and no new debt or equity is issued. How much external financing is needed to support the 16 percent growth rate in sales? Income statement 2019 Net sales 17,300 Cost of Goods Sold 10,600 Depreciation 3,250 Earning before interest and taxes 3,450 Interest paid 680 Taxable income 2,770 Taxes 940 Net income…
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Assume today is 15 Jan 2020. You t e the following information regarding Salalah Ceramics 31 Dec 2019 31 Dec 2020 31 Dec 2021 31 Dec 2022 Cash Flow from 12000 Operations Cash Investment 7600 Cash flow from operations will grow by 10% every year up to 2022 and cash investment will grow by 20% every year up to 2022. FCF growth after 2022 will be 5% and required return is 12%. Assuming net debt is 7000 1. What is the firm's enterprise value 2. What is the firm's value of equity
Assume that today is December 31, 2021, and that the following information applies to Abner Airlines: ⚫ After-tax operating Income [EBIT(1-T)] for 2022 is expected to be $500 million. The depreciation expense for 2022 is expected to be $160 million. The capital expenditures for 2022 are expected to be $375 million. . No change is expected in net operating working capital. ⚫ The free cash flow is expected to grow at a constant rate of 7% per year. ⚫The required return on equity is 15%. The WACC is 10%. The firm has $204 million of nonoperating assets. ⚫ The market value of the company's debt is $2.885 billion. 190 million shares of stock are outstanding. Using the corporate valuation model approach, what should be the company's stock price today? Do not round intermediate calculations. Round your answer to the nearest cent.
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Horizon Value of Free Cash Flows Current and projected free cash flows for Radell Global Operations are shown below. Actual 2021 2022 Projected 2023 2024 Free cash flow (millions of dollars) $616.100 $676.780 $716.827 $766.355 Growth is expected to be constant after 2023, and the weighted average cost of capital is 12%. What is the horizon (continuing) value at 2024 if growth from 2023 remains constant? Do not round intermediate calculations. Enter your answer in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answer to the nearest whole number. $ million
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Net Income for Company A is $200,000 in 2014, $300,000 in 2015, $400,000 in 2016, $500,000 in 2017, and $600,000 in 2018. The expected growth for all years after 2018 is 5%, the 90-Day T-Bill Rate is 20%, and the appropriate percentage above risk-free rate is 12%. Using this information, what is Net Present Value? A. 412,020.21 B. 812,020.21
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