Smith and T Co. is expected to generate a free cash flow (FCF) of $10,180.00 million this year (FCF₁ = $10,180.00 million), and the FCF is expected to grow at a rate of 21.40% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 2.82% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Smith and T Co.’s weighted average cost of capital (WACC) is 8.46%, what is the current total firm value of Smith and T Co.? (Note: Round all intermediate calculations to two decimal places.) $295,231.37 million $305,167.35 million $31,650.86 million $246,026.14 million Smith and T Co.’s debt has a market value of $184,520 million, and Smith and T Co. has no preferred stock. If Smith and T Co. has 300 million shares of common stock outstanding, what is Smith and T Co.’s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $615.06 $204.02 $225.52 $205.02
Smith and T Co. is expected to generate a free cash flow (FCF) of $10,180.00 million this year (FCF₁ = $10,180.00 million), and the FCF is expected to grow at a rate of 21.40% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 2.82% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Smith and T Co.’s weighted average cost of capital (WACC) is 8.46%, what is the current total firm value of Smith and T Co.? (Note: Round all intermediate calculations to two decimal places.) $295,231.37 million $305,167.35 million $31,650.86 million $246,026.14 million Smith and T Co.’s debt has a market value of $184,520 million, and Smith and T Co. has no preferred stock. If Smith and T Co. has 300 million shares of common stock outstanding, what is Smith and T Co.’s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $615.06 $204.02 $225.52 $205.02
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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Question
Smith and T Co. is expected to generate a free cash flow (FCF) of $10,180.00 million this year (FCF₁ = $10,180.00 million), and the FCF is expected to grow at a rate of 21.40% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 2.82% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Smith and T Co.’s weighted average cost of capital (WACC) is 8.46%, what is the current total firm value of Smith and T Co.? (Note: Round all intermediate calculations to two decimal places.)
$295,231.37 million
$305,167.35 million
$31,650.86 million
$246,026.14 million
Smith and T Co.’s debt has a market value of $184,520 million, and Smith and T Co. has no preferred stock . If Smith and T Co. has 300 million shares of common stock outstanding, what is Smith and T Co.’s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.)
$615.06
$204.02
$225.52
$205.02
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