Phoenix Corp. faltered in the recent recession but is recovering. Free cash flow has grown rapidly. Forecasts made in 2019 are asfollows:($ millions) 202020212022 2023 2024Net income1.02.44.0 4.504.8Investment1.01.41.61.81.8Free cash flow01.02.42.73.0Phoenix'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 8%. (Do not round intermediate calculations. Enter your answer inmillions rounded to 2 decimal places.)Present valuemillionb. Assume that Phoenix has 13 million shares outstanding. What is the price per share? (Do not round intermediate calculations.Round your answer to 2 decimal places.)Price per sharec. If the net income for 2019 is $1 million, what is Phoenix's P/E ratio? (Do not round intermediate calculations. Round your answer to2 decimal places.)YearsPresent ValueRate of Returnc. If the net income for 2019 is $1 million, what is Phoenix's P/E ratio? (Do not round intermediate calculations. Round your answer to2 decimal places.)Years2020Present ValueRate of Return%2021%2022%2023%2024%

Part (a): Calculate Present Value (PV) of Free Cash FlowIdentify the Discount Rate and YearsUse the…

Answered: Phoenix Corp. faltered in the recent…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 25SP: Start with the partial model in the file Ch07 P25 Build a Model.xlsx on the textbook’s Web site....

See similar textbooks

Similar questions

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 4.70 1.9 2.8 2024 5.0 1.9 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?
jitu
None
**Please solve using Excel and explain all the formulas**
3
Start with the partial model in the file Ch07 P25 Build a Model.xlsx on the textbook’s Web site. Selected data for the Derby Corporation are shown here. Use the data to answer the following questions. Calculate the estimated horizon value (i.e., the value of operations at the end of the forecast period immediately after the Year-4 free cash flow). Assume growth becomes constant after Year 3. Calculate the present value of the horizon value, the present value of the free cash flows, and the estimated Year-0 value of operations. Calculate the estimated Year-0 price per share of common equity.
Current and projected free cash flows for Radell Global Operations are shown below. Actual Projected 2019 2020 2021 2022 Free cash flow $603.460 $664.140 $704.187 $746.440 (millions of dollars) Growth is expected to be constant after 2021, and the weighted average cost of capital is 10.8%. What is the horizon (continuing) value at 2022 if growth from 2021 remains constant? Do not round intermediate calculations. Enter your answer in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answer to the nearest whole number.
The forecast for the free cash flows for Jimi's Vinyl Records for 2023 are provided below. Assume that free cash flow is paid at the end of each year and we are at the beginning of year 2023. Because vinyl records are a niche market, Jimi forecasts his cash flow to remain constant at 2023's year-end level in perpetuity. Jimi Vinyl's WACC is 8.39%. Jimi's Vinyl Records Selected Financial Information 2022 65535 16480 12000 85000 20282 OCF Net Working Capital CAPEX Debt Shares Outstanding 2023 73450 23480 24500 85000 20282 Use this information to find Jimi's Vinyl Records share price as of the beginning of year 2023. Make your answer accurate to cents. That is, if your answer is 9.252, write 9.25. Also, do not include symbols (%,$) in your answer.
Current and projected free cash flows for Radell Global Operations are shown below. Actual 2021 Projected 2023 2022 2024 $613.960 $674.640 $714.687 $764.215 Free cash flow (millions of dollars) Growth is expected to be constant after 2023, and the weighted average cost of capital is 10%. 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
Please correctly with steps
Horizon Value of Free Cash Flows Current and projected free cash flows for Radell Global Operations are shown below. Free cash flow (millions of dollars) Actual Projected 2021 2020 2022 2019 $610.660 $671.340 $711.387 $761.180 Growth is expected to be constant after 2021, and the weighted average cost of capital is 11.15%. What is the horizon (continuing) value at 2022 if growth from 2021 remains constant? Do not round intermediate calculations. Enter your answer in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answer to the nearest whole number. million
The following is a four-year forecast for Torino Marine. Year Free cash flow ($ 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.

SEE MORE QUESTIONS

Recommended textbooks for you

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Entrepreneurial Finance

Finance

ISBN:

9781337635653

Author:

Leach

Publisher:

Cengage

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Entrepreneurial Finance

Finance

ISBN:

9781337635653

Author:

Leach

Publisher:

Cengage

SEE MORE TEXTBOOKS