Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1.) Suppose a company paid out $1.3 in dividends per share during the past quarter. The stock is currently trading at $41.4 per share. What

1.) Suppose a company paid out $1.3 in dividends per share during the past quarter. The stock is currently trading at $41.4 per share. What is this company's dividend yield? Answer in percent, rounded to one decimal place.

2.) You are valuing Soda City Inc. It has $129 million of debt, $79 million of cash, and 179 million shares outstanding. You estimate its cost of capital is 10.1%. You forecast that it will generate revenues of $723 million and $777 million over the next two years, after which it will grow at a stable rate in perpetuity. Projected operating profit margin is 31%, tax rate is 24%, reinvestment rate is 43%, and terminal EV/FCFF exit multiple at the end of year 2 is 11. What is your estimate of its share value? Round to one decimal place.

3. What is the FCFF of a firm with revenues of $314 million, operating profit margin of 39%, tax rate of 29%, depreciation and amortization expense of $24 million, capital expenditures of $36 million, acquisition expenses of $7 million and change in net working capital of $16 million? Answer in millions, rounded to one decimal place (e.g., $245,684,235 = 245.7). (Assume non-operating income and expenses are zero, so that EBIT = Operating income.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Airline Management Finance

Authors: Victor Hughes

1st Edition

1138610690, 978-1138610699

More Books

Students also viewed these Finance questions