Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

At the beginning of its fiscal year 2022, an analyst made the following forecast for GM, Inc., the consumer foods company, for 2022-2025 (in

image text in transcribed

At the beginning of its fiscal year 2022, an analyst made the following forecast for GM, Inc., the consumer foods company, for 2022-2025 (in millions of dollars): 2022 2023 2024 2025 Cash flow from operations 2,014 2,057 2,095 2,107 Cash investment in operations (300) (380) (442) (470) GM Corp reported $6,192 million in short-term and long-term debt at the end of 2021 but very little in interest-bearing debt assets. Use a required return of 9 percent to calculate both the enterprise value and equity value for GM Corp at the beginning of 2022 under two forecasts for long-run cash flows: a. Free cash flow will grow at 3 percent per year after 2025. GM Corp had 369 million shares outstanding at the end of 2022, trading at $47 per share. Calculate value per share.

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

Financial statements

Authors: Stephen Barrad

5th Edition

978-007802531, 9780324186383, 032418638X

More Books

Students also viewed these Accounting questions

Question

Describe Yaloms therapeutic factors for group psychotherapy.

Answered: 1 week ago