The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you've done in previous problems, but it focuses on a firm's free cash flows (FCFS) instead of its dividends. Some firms don't pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model. Blur Corp. has an expected net operating profit after taxes, EBIT(1-T), of $7,600 million in the coming year. In addition, the firm is expected to have net capital expenditures of $1,140 million, and net operating working capital (NOWC) is expected to increase by $10 million. How much free cash flow (FCF) is Blur Corp. expected to generate over the next year? O $118,668 million O $6,470 million O $6,450 million O $8,730 million
The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you've done in previous problems, but it focuses on a firm's free cash flows (FCFS) instead of its dividends. Some firms don't pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model. Blur Corp. has an expected net operating profit after taxes, EBIT(1-T), of $7,600 million in the coming year. In addition, the firm is expected to have net capital expenditures of $1,140 million, and net operating working capital (NOWC) is expected to increase by $10 million. How much free cash flow (FCF) is Blur Corp. expected to generate over the next year? O $118,668 million O $6,470 million O $6,450 million O $8,730 million
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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Transcribed Image Text:net capital expenditures of $1,140 million, and net operating working capital (NOWC) is expected to increase by $10 million. How much free cash flow
(FCF) is Blur Corp. expected to generate over the next year?
O $118,668 million
O $6,470 million
O $6,450 million
O $8,730 million
Blur Corp.'s FCFS are expected to grow at a constant rate of 4.62% per year in the future. The market value of Blur Corp.'s outstanding debt is
$31,412 million, and its preferred stocks' value is $17,451 million. Blur Corp. has 150 million shares of common stock outstanding, and its weighted
average cost of capital (WACC) equals 13.86%.
Term
Total firm value
Intrinsic value of common equity
Intrinsic value per share
Value (Millions)
Using the preceding information and the FCF you calculated in the previous question, calculate the appropriate values in this table. Assume the firm
has no nonoperating assets.
Transcribed Image Text:The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach are some
examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you've done in previous
problems, but it focuses on a firm's free cash flows (FCFS) instead of its dividends. Some firms don't pay dividends, or their dividends
are difficult to forecast. For that reason, some analysts use the corporate valuation model.
Blur Corp. has an expected net operating profit after taxes, EBIT(1-T), of $7,600 million in the coming year. In addition, the firm is expected to have
net capital expenditures of $1,140 million, and net operating working capital (NOWC) is expected to increase by $10 million. How much free cash flow
(FCF) is Blur Corp. expected to generate over the next year?
O $118,668 million
O $6,470 million
O $6,450 million
O $8,730 million
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