Start with the partial model in the file Ch08 P25 Build a Model.xlsx. Selected data for the Derby Corporation are shown here. Use the data to answer the questions. INPUTS (In Millions) Year Current 0 Projected 1 2 3 Free cash flow -$25.0 $25.0 $90.0 $97.2 Marketable securities $ 30 Notes payable Long-term bonds Preferred stock $240 $ 40 WACC Number of shares of stock 12.00% 50 The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations. Download spreadsheet Ch08 P25 Build a Model-276077.xxx a. Calculate the estimated horizon value (ie, 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. Enter your answer in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answer to two decimal places. $ milion b. Calculate the present value of the horizon value, the present value of the free cash flows, and the estimated Year-0 value of operations. Enter your answers in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answers to two decimal places. Present value of HV Present value of FCF Value of operations milion milion milion c. Calculate the estimated Year-0 price per share of common equity. Round your answer to the nearest cent.
Start with the partial model in the file Ch08 P25 Build a Model.xlsx. Selected data for the Derby Corporation are shown here. Use the data to answer the questions. INPUTS (In Millions) Year Current 0 Projected 1 2 3 Free cash flow -$25.0 $25.0 $90.0 $97.2 Marketable securities $ 30 Notes payable Long-term bonds Preferred stock $240 $ 40 WACC Number of shares of stock 12.00% 50 The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations. Download spreadsheet Ch08 P25 Build a Model-276077.xxx a. Calculate the estimated horizon value (ie, 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. Enter your answer in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answer to two decimal places. $ milion b. Calculate the present value of the horizon value, the present value of the free cash flows, and the estimated Year-0 value of operations. Enter your answers in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answers to two decimal places. Present value of HV Present value of FCF Value of operations milion milion milion c. Calculate the estimated Year-0 price per share of common equity. Round your answer to the nearest cent.
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter24: Analysis Of Financial Statements
Section: Chapter Questions
Problem 1SEB
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Transcribed Image Text:Start with the partial model in the file Ch08 P25 Build a Model.xlsx. Selected data for the Derby Corporation are shown here. Use the data to answer the questions.
INPUTS (In Millions)
Year
Current
0
Projected
1
2
3
Free cash flow
-$25.0 $25.0
$90.0 $97.2
Marketable securities
$ 30
Notes payable
Long-term bonds
Preferred stock
$240
$ 40
WACC
Number of shares of stock
12.00%
50
The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations.
Download spreadsheet Ch08 P25 Build a Model-276077.xxx
a. Calculate the estimated horizon value (ie, 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. Enter your answer in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answer to two decimal places.
$
milion
b. Calculate the present value of the horizon value, the present value of the free cash flows, and the estimated Year-0 value of operations. Enter your answers in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answers to two decimal places.
Present value of HV
Present value of FCF
Value of operations
milion
milion
milion
c. Calculate the estimated Year-0 price per share of common equity. Round your answer to the nearest cent.
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