1.2.

Heavy Metal Corporation is expected to generate the following free cash flows over the next five years Year 2 4 FCF ( million) 51.4 67.1 77.6 73.5 83.4 Thereafter, the free cash flows are expected to grow at the industry average of 3.5% per year. Using the discounted free cash flow model and a weighted average cost of capital of 14.2% a. Estimate the enterprise value of Heavy Metal. b. If Heavy Metal has no excess cash, debt of $306 million, and 40 million shares outstanding, estimate its share price a. Estimate the enterprise value of Heavy Metal. The enterprise value will be million (Round to two decimal places.) Enter your answer in the answer box and then click Check Answer part remaining Clear All Check Answer Roybus, Inc., a manufacturer of flash memory, just reported that its main production facility in Taiwan was destroyed in a fire. Although the plant was fully insured, the loss of production will decrease Roybus's free cash flow by $176 million at the end of this year and by $57 mllion at the end of next year. a. If Roybus has 40 million shares outstanding and a weighted average cost of capital of 12.8%, what change in Roybus's stock price would you expect upon this announcement? (Assume that the value of Roybus's debt is not affected by the event.) b. Would you expect to be able to sell Roybus stock on hearing this announcement and make a profit? Explain. a. If Roybus has 40 million shares outstanding and a weighted average cost of capital of 12.8%, what change in Roybus's stock price would you expect upon this announcement? (Assume that the value of Roybus's debt is not affected by the event.) The change in price per share would be (Round to the nearest cent) Enter your answer in the answer box and then click Check Answer part remaining Clear All Check