Widget Corp. is expected to generate a free cash flow (FCF) of $1,235.00 million this year (FCF, = $1,235.00 million), and the FCF is expected to growat a rate of 20.20% over the following two years (FCF, and FCF). After the third year, however, the FCF is expected to grow at a constant rate of2.46% per year, which will last forever (FCF). Assume the firm has no nonoperating assets. If Widget Corp.'s weighted average cost of capital (WACC)is 7.38%, what is the current total firm value of Widget Corp.? (Note: Round all intermediate calculations to two decimal places.)O. $41,037.63 millionO $33,890.56 millionO $3,878.69 millionO $40,668.67 million

To calculate the current total firm value of Widget Corp., we need to use the discounted cash flow…

Answered: Widget Corp. is expected to generate a…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 20EA: Towson Industries is considering an investment of $256,950 that is expected to generate returns of...

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Demo Inc. is expected to generate a free cash flow (FCF) of $8,715.00 million this year (FCF1 = $8,715.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF2 and FCF). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF4). Assume the firm has no nonoperating assets. If Demo Inc.'s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Demo Inc.? (Note: Round all intermediate calculations to two decimal places.) $156,455.46 million $26,304.04 million $207,691.99 million $187,746.55 million Demo Inc.'s debt has a market value of $117,342 million, and Demo Inc. has no preferred stock. If Demo Inc. has 600 million shares of common stock outstanding, what is Demo Inc.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $64.19 $71.71 $ 65.19 $195.57
Lex Corp. is expected to generate a free cash flow (FCF) of $4,555.00 million this year (FCF, = $4,555.00 million), and the FCF is expected to grow at a rate of 21.40% over the following two years (FCF, and FCF,). After the third year, however, the FCF is expected to grow at a constant rate of 2.82% per year, which will last forever (FCF.). Assume the firm has no nonoperating assets. If Lex Corp.'s weighted average cost of capital (WACC) is 8.46%, what is the current total firm value of Lex Corp.? (Note: Round all intermediate calculations to two decimal places.) $132,100.10 million $110,083.42 million O $14,162.05 million O $136,545.92 million Lex Corp.'s debt has a market value of $82,563 million, and Lex Corp. has no preferred stock. If Lex Corp. has 525 million shares of common stock outstanding, what is Lex Corp.'s estimated Intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) O $157.26 O $57.66 O $51.42 O $52.42
ABC Telecom Inc. is expected to generate a free cash flow (FCF) of $1,910.00 million this year (FCF, = $1,910.00 million), and the FCF is expected to grow at a rate of 19.00% over the following two years (FCF, and FCF). After the third year, however, the FCF is expected to grow at a constant rate of 2.10% per year, which will last forever (FCF). Assume the firm has no nonoperating assets. If ABC Telecom Inc.'s weighted average cost of capital (WACC) is 6.30%, what is the current total firm value of ABC Telecom Inc.? (Note: Round all intermediate calculations to two decimal places.) $6,060.06 million $72,959.93 million. $71,811.25 million $60,799.94 million ABC Telecom Inc.'s debt has a market value of $45,600 million, and ABC Telecom Inc. has no preferred stock. If ABC Telecom Inc. has 675 million shares of common stock outstanding, what is ABC Telecom Inc.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $22.52…
Galaxy Corp. is expected to generate a free cash flow (FCF) of $6,430.00 million this year (FCF₁ = $6,430.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Galaxy Corp.’s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Galaxy Corp.? (Note: Round all intermediate calculations to two decimal places.) $153,236.96 million $115,434.20 million $19,407.34 million $138,521.04 million Galaxy Corp.’s debt has a market value of $86,576 million, and Galaxy Corp. has no preferred stock. If Galaxy Corp. has 450 million shares of common stock outstanding, what is Galaxy Corp.’s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal…
Acme Inc. is expected to generate a free cash flow (FCF) of $12,365.00 million this year (FCF₁ = $12,365.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Acme Inc.’s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Acme Inc.? (Note: Round all intermediate calculations to two decimal places.) $266,378.12 million $294,677.06 million $221,981.77 million $37,320.65 million Acme Inc.’s debt has a market value of $166,486 million, and Acme Inc. has no preferred stock. If Acme Inc. has 675 million shares of common stock outstanding, what is Acme Inc.’s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $246.65…
Globex Corp. is expected to generate a free cash flow (FCF) of $145.00 million this year (FCF₁ = $145.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF2 and FCF3). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF4). Assume the firm has no nonoperating assets. If Globex Corp.'s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Globex Corp.? (Note: Round all intermediate calculations to two decimal places.) O $2,603.11 million O $3,123.73 million O $437.64 million O $3,455.59 million Globex Corp.'s debt has a market value of $1,952 million, and Globex Corp. has no preferred stock. If Globex Corp. has 375 million shares of common stock outstanding, what is Globex Corp.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) O $1.74 O $0.74 $1.91
Allied Biscuit Co. is expected to generate a free cash flow (FCF) of $7,795.00 million this year (FCF, = $7,795.00 million), and the FCF is expected to grow at a rate of 19.00% over the following two years ( FCF, and FCF). After the third year, however, the FCF is expected to grow at a constant rate of 2.10% per year, which will last forever (FCF). Assume the firm has no nonoperating assets. If Allied Biscuit Co.'s weighted average cost of capital (WACC) is 6.30 %, what is the current total firm value of Allied Biscuit Co. ? (Note: Round all intermediate calculations to two decimal places.) $293,072.74 million $ 24,732.03 million $297,760.66 million $248, 133.88 million
Praxis Corp. is expected to generate a free cash flow (FCF) of $12,975.00 million this year (FCF₁ = $12,975.00 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 Praxis Corp.’s weighted average cost of capital (WACC) is 8.46%, what is the current total firm value of Praxis Corp.? (Note: Round all intermediate calculations to two decimal places.) a. $376,289.47 million b. $388,953.45 million c. $313,574.56 million d. $40,340.86 million Praxis Corp.’s debt has a market value of $235,181 million, and Praxis Corp. has no preferred stock. If Praxis Corp. has 450 million shares of common stock outstanding, what is Praxis Corp.’s estimated intrinsic value per share of common stock? (Note: Round all…
Praxis Corp. is expected to generate a free cash flow (FCF) of $5,670.00 million this year (FCF, = $5,670.00 million), and the FCF is expected to grow at a rate of 22.60% over the following two years (FCF, and FCF). After the third year, however, the FCF is expected to grow at a constant rate of 3.18% per year, which will last forever (FCF). Assume the firm has no nonoperating assets. If Praxis Corp.'s weighted average cost of capital (WACC) is 9.54%, what is the current total firm value of Praxis Corp.? (Note: Round all intermediate calculations to two decimal places.) $155,715.35 million O $17,453.56 million $122,645.86 million $147,175.03 million Praxis Corp.'s debt has a market value of $91,984 million, and Praxis Corp. has no preferred stock. If Praxis Corp. has 375 million shares of common stock outstanding, what is Praxis Corp.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $81.76 $80.76 $89.94 $245.29
Luthor Corp. is expected to generate a free cash flow (FCF) of $6,415.00 million this year (FCF₁ = $6,415.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Luthor Corp.’s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Luthor Corp.? (Note: Round all intermediate calculations to two decimal places.) A.) $152,879.38 million B.) $115,164.84 million C.) $19,362.07 million D.) $138,197.81 million Luthor Corp.’s debt has a market value of $86,374 million, and Luthor Corp. has no preferred stock. If Luthor Corp. has 675 million shares of common stock outstanding, what is Luthor Corp.’s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to…
ABC Telecom Inc. is expected to generate a free cash flow (FCF) of $1,570.00 million this year (FCF₁ = $1,570.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If ABC Telecom Inc.’s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of ABC Telecom Inc.? (Note: Round all intermediate calculations to two decimal places.) ABC Telecom Inc.’s debt has a market value of $21,139 million, and ABC Telecom Inc. has no preferred stock. If ABC Telecom Inc. has 675 million shares of common stock outstanding, what is ABC Telecom Inc.’s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.)
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…

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