Year 2019 2020 2021 2022 2023 Long-term Debt ($M) 45000 46,000 47,333 48,667 50,000 Profits ($M, after tax) 10,000 16,000 18,000 21,000 24,000 Interest ($M, after tax) 878 900 950 950 975 Working Cap ($M) Depreciation ($M) Cap Spending ($M) Cost of equity 8,000 11,000 14,000 20,000 23,000 25,000 26,000 27,000 28,000 29,000 24,150 27,767 31,383 35,000 0.112 0.110 0.113 0.115 WACC 0.100 0.110 0.110 0.120 Number of equity shares (Million) 2,000 Terminal growth rate 0.06
Year 2019 2020 2021 2022 2023 Long-term Debt ($M) 45000 46,000 47,333 48,667 50,000 Profits ($M, after tax) 10,000 16,000 18,000 21,000 24,000 Interest ($M, after tax) 878 900 950 950 975 Working Cap ($M) Depreciation ($M) Cap Spending ($M) Cost of equity 8,000 11,000 14,000 20,000 23,000 25,000 26,000 27,000 28,000 29,000 24,150 27,767 31,383 35,000 0.112 0.110 0.113 0.115 WACC 0.100 0.110 0.110 0.120 Number of equity shares (Million) 2,000 Terminal growth rate 0.06
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
Related questions
Question
100%
Using the information you have collected above, perform calculations to explain to interns as to how the following are calculated:
-
Free cash flow to firm -
Free cash to equity
-
Value of the firm according to the free cash flow to firm method
-
Value of the firm according to the free cash flow to equity method
-
Estimated price of an equity share according to the free cash flow to firm method and the free
cash flow to equity method
Note: Round off the numbers to the nearest integer.
Transcribed Image Text:Year
2019
2020
2021
2022
2023
Long-term Debt ($M)
45000
46,000
47,333
48,667
50,000
Profits ($M, after tax)
10,000
16,000
18,000
21,000
24,000
Interest ($M, after tax)
878
900
950
950
975
Working Cap ($M)
Depreciation ($M)
Cap Spending ($M)
Cost of equity
8,000
11,000
14,000
20,000
23,000
25,000
26,000
27,000
28,000
29,000
24,150
27,767
31,383
35,000
0.112
0.110
0.113
0.115
WACC
0.100
0.110
0.110
0.120
Number of equity shares (Million)
2,000
Terminal growth rate
0.06
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 6 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education