The forecast for WizzAir's free cash flows for next year is provided in the table. Assume that free cash flow is paid at the end of each year and we are at the beginning of ayear. Last year's values are for the year end yesterday. Analysts expect WizzAir's cash flow to remain constant at next year's level in perpetuity. The WACC for WizzAir is10%. What is the fair price for WizzAir's shares today?Selected Financial InformationWizzAir Inc.SalesDepreciationEBITTax Rate, TNet Working CapitalNet Property and EquipmentLong-Term DebtShares Outstanding($000s)13.28 XLast Year125,6002,59515,22035.00%-7,80020,1509,0005,000Round your answer to the nearest cent.Next Year134,7993,10016,33535.00%-9,55024,0759,0005,000

Value of company can be calculated as the present value of free cash flow based on the WACC of the…

Answered: Sales Depreciation EBIT Tax Rate, T Net…

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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A firm expects to make payments of 1.1, 1.5, 1.2, 1.4 and 1.9 million for a particular supply over each of the next 5 years. What constant annual payment is this equivalent to if the annual rate is 10%? That is, what is the time-value weighted average of this mixed-cash flow stream?
Dosky expects to receive GHȼ300, GHȼ500, GHȼ1000 and GHȼ1500 in year1,2,3 and 4 respectively. What is the value of these cash flows at the end of the fourth year given 10 percent interest rate?
An investment, which is worth $54,000.00 and has an expected return of 11.80 percent, is expected to pay fixed annual cash flows for a given amount of time. The first annual cash flow is expected in 1 year from today and the last annual cash flow is expected in 6 years from today. What is the present value of the annual cash flow that is expected in 3 years from today? O $10,516.47 (plus or minus 10 dollars) O $13,059.88 (plus or minus 10 dollars) O $9,345.74 (plus or minus 10 dollars) O $11,681.46 (plus or minus 10 dollars) O none of the answers are within 10 dollars of the correct answer +
Suppose you expect to receive the following future cash flows at the end of the years indicated. $2300 in year 2, $5200 in year 4, $2600 in year 5, and $8000 in year 9. If the interest rate is 13% per year. What is the value of all the four flows at year 3?
Your consulting firm will produce cash flows of $190,000 this year, and you expect cash flows thereafter to keep pace with any increase in the general level of prices. The interest rate currently is 5.2%, and you anticipate inflation of about 1.2%. a. What is the present value of your firm's cash flows for years 1 through 5? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Present value b. How would your answer to (a) change if you anticipated no growth in cash flow? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Present value
Suppose an investor is considering the purchase of a financial instru- ment that promises to deliver the following semiannual cash flows: four payments of $40 every six months for two years and $1,000 delivered four semiannual periods from now. Suppose the price of this financial instrument is $982.0624. What yield is being offered by this financial instrument? Please explain in detail.
Consider an EOY geometric gradient, which lasts for eight years, whose initial value at EOY one is $5,000 and f= 6% per year thereafter. Find the equivalent uniform gradient amount over the same period if the initial value of the cash flows at the end of year one is $4,000. Answer the following questions to determine the value of the gradient amount, G. The interest rate is 8% per year. Solve, a. What is P0 for the geometric gradient series? b. What is P0 of the uniform (arithmetic) gradient of cash flows? c. What is the value of G?
You will receive $100 one year from today and another $100 two years from today. The interest rate for the first year is 1%, but rates are expected to rise to 5% in the second year. What is the present value of the cash flows? Round your answer to two decimal places.
What is the present value of the following cash-flow stream if the interest rate is 12%? You receive 100 at the end of first year, 800 at the end of second year, and 460 at the end of third year. (12% is annual interest rate and given annual compounding) (Please round your answer to the nearest whole number)
Your consulting firm will produce cash flows of $145,000 this year, and you expect cash flows thereafter to keep pace with any increase in the general level of prices. The interest rate currently is 6.9%, and you anticipate inflation of about 2.9%. a. What is the present value of your firm's cash flows for years 1 through 5? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Present value $ Present value 279,013.75 b. How would your answer to (a) change if you anticipated no growth in cash flow? Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
An investment, which is worth $57,023.00 and has an expected return of 17.00 percent, is expected to pay fixed annual cash flows forever with the next annual cash flow expected in 1 year. What is the present value of the annual cash flow that is expected in 3 years from today? O $9,693.91 (plus or minus 3 dollars) O $35,603.48 (plus or minus 3 dollars) O $6,052.59 (plus or minus 3 dollars) O $8,285.39 (plus or minus 3 dollars) O none of the answers are within 3 dollars of the correct answer
A geometric gradient that increases at ? = 6% per year for 15 years is shown in the accompanying diagram. The annual interest rate is 12%. a.) What is the present equivalent value of this gradient? . b.) Draw a cash flow diagram

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Sales Depreciation EBIT Tax Rate, T Net Working Capital Net Property and Equipment Long-Term Debt Shares Outstanding Last Year 125,600 2,595 15,220 35.00% -7,800 20,150 9,000 5,000 Round your answer to the nearest cent. Next Year 134,799 3,100 16,335 35.00% -9,550 24,075 9,000 5,000