The following is a four-year forecast for Torino Marine.Year2022202320242025Free cash flow ($ millions)−608198120Estimate 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 13 percent and its tax rate is 20 percent.Note: Do not round intermediate calculations. Enter your answer in millions rounded to 1 decimal place.Estimate the fair market value per share of Torino Marine’s equity at the end of 2021 if the company has 45 million shares outstanding and the market value of its interest-bearing liabilities on the valuation date equals $350 million.Note: Do not round intermediate calculations. Round your answer to 2 decimal places. I have the second question right just really need the first one!

The question is based on the concept of Financial Management. In order to calculate the fair value…

Answered: The following is a four-year forecast…

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 11P

Related questions

Question

The following is a four-year forecast for Torino Marine.

Year	2022	2023	2024	2025
Free cash flow ($ millions)	−60	81	98	120

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 13 percent and its tax rate is 20 percent.
Note: Do not round intermediate calculations. Enter your answer in millions rounded to 1 decimal place.
Estimate the fair market value per share of Torino Marine’s equity at the end of 2021 if the company has 45 million shares outstanding and the market value of its interest-bearing liabilities on the valuation date equals $350 million.
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.

I have the second question right just really need the first one!

Expert Solution