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8b. If long-run free-cash-flow growth is 6% and free cash flow in 2023 is $108.4, what is the expected free cash flow in 2024? (page
8b. If long-run free-cash-flow growth is 6% and free cash flow in 2023 is $108.4, what is the expected free cash flow in 2024? (page 338) | |||||||
Free cash flow in 2023 | $ 108.4 | ||||||
Long-run free cash flow growth | 6% | ||||||
Free cash flow in 2024 | (Solution: $114.9) | ||||||
8c. What is the horizon value at 2023 given the FCF in 2024, the long-term growth rate of 6%, and a weighted average cost of capital of 10%? (page 338) | |||||||
Weighted average cost of capital | 10% | ||||||
Horizon value at 2023 | (Solution: $2,872.6 vs. $2,872.7 in book) |
9a. Calculate the present value of the 2023 horizon value using information from 8c. Use the PV function (page 338) | |||||||
Years to discount | 5.00 | ||||||
Present value of 2023 horizon value | (Solution: $1,783.7) | ||||||
9b. Given the information below, calculate total corporate value. (page 338) | |||||||
Sum of present values of FCF in years 2019-2023 | $ 245.10 | ||||||
Total corporate value | (Solution: $2,028.8) | ||||||
9c. Given the market value of debt and preferred stock, and the shares outstanding, compute the estimate of the intrinsic value per share. (page 338) | |||||||
Market value of debt and preferred stock | $ 860.00 | ||||||
Shares outstanding in millions | 50.00 | ||||||
Intrinsic value per share estimate | (Solution: $23.38) |
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