Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

10. Corporate valuation model The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value-added (EVA) approach are some examples of valuation techniques.

image text in transcribed

10. Corporate valuation model The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value-added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you've done in previous problems, but it focuses on a firm's free cash flows (FCFs) instead of its dividends. Some firms don't pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model Blur Corp. has an expected net operating profit after taxes, EBIT(1 T), of $7,600 million in the coming year. In addition, the firm is expected to have net capital expenditures of $1,140 million, and net working capital (NWC) is expected to increase by $10 million. How much free cash flow (FCF) is Blur Corp. expected to generate over the next year? O$8,730 million $118,668 mllion O $6,470 million $6,450 million Blur Corp.'s FCFs are expected to grow at a constant rate of 4.62% per year in the future. The market value of Blur Corp.'s outstanding debt is $31,412ilion, and preferred stocks' value is $17,451 million. Blur Corp. has 150 million shares of common stock outstanding, and its weighted average cost of capital (WACC) equals 13.86%. Term Value (Millions) Total firm value Value of common equity Intrinsic value per share Using the preceding information and the FCF you calculated in the previous question, calculate the appropriate values in this table

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

Fearless Finances A Timeless Guide To Building Wealth

Authors: Cassandra Cummings

1st Edition

1400230381, 978-1400230389

More Books

Students also viewed these Finance questions

Question

Which months of this year 5 Mondays ?

Answered: 1 week ago

Question

Define Leap year?

Answered: 1 week ago

Question

Prepare a short profile of Lucy Clifford ?

Answered: 1 week ago

Question

Prepare a short profile of Rosa parks?

Answered: 1 week ago