Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Blitz Industries has 5 million outstanding shares of common stock, $ 100 million in debt, $30 million in excess cash, and the following financial forecast
Blitz Industries has 5 million outstanding shares of common stock, $ 100 million in debt, $30 million in excess cash, and the following financial forecast for the next four years (all figures in millions of US$). Current time is t-0 and column 1 shown below is at t=1 years. Year 1 2 3 4 Sales 336.00 369.60 399.17 423.12 Cost of Goods Sold 218.40 240.24 259.46 275.03 Gross Profit 117.60 129.36 139.71 148.09 Selling, General, and Administrative 67.20 73.92 79.83 84.62 Depreciation 7.56 8.32 8.98 9.52 EBIT 42.84 47.12 50.89 53.95 Other items: Capital Expenditures 10.08 11.09 11.98 12.69 Increase in NWC 6.48 6.05 5.32 4.31 The tax rate is 21%. Calculate all necessary free cash flows (FCFs) based on the information given. Assume that Blitz's free cash flows are expected to grow at a 4% rate forever beyond year 4. If Blitzs weighted average cost of capital or WACC is 10%, what is the value of Blitz's common stock per share based on this information
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started