Question
can anyone help me figure this out? Complete a free cash flow analysis with this information to come up with an estimate for intrinsic value
can anyone help me figure this out?
Complete a free cash flow analysis with this information to come up with an estimate for intrinsic value of this stock. In this analysis, you should use the information for year 5 solely for the calculation of terminal value. Note that this means you can calculate a FCFF and FCFE directly, rather than needing to forecast these values out with the growth rate. You may assume all numbers are properly scaled, and that the debt-to-equity ratio, WACC, and E(Ri) are all constant through time.
Forecast Values
| 0 | 1 | 2 | 3 | 4 | 5 |
EBIT | 2750 | 2850 | 2950 | 3050 | 3150 | 3250 |
Depreciation | 250 | 250 | 250 | 250 | 250 | 250 |
CapEx | 0 | 2500 | 1000 | 750 | 500 | 250 |
NWC | 1100 | 1140 | 1180 | 1220 | 400 | 200 |
Interest | 337.5 | 342 | 346.5 | 351 | 355.5 | 360 |
Net Debt | 7500 | 7600 | 7700 | 7800 | 7900 | 8000 |
Firm Characteristics
Firm Financing |
|
Debt % | 30.0% |
Equity % | 70.0% |
Shares Outstanding | 575.5M |
Tax Rate | 21.0% |
Long Run Growth Rate | 2.0% |
Risk Free Rate | 2.5% |
Expected Market Return | 11.0% |
Firm Beta | 1.4 |
Free Cash Flows
Year | 1 | 2 | 3 | 4 | 5 | TV |
FCFF |
|
|
|
|
|
|
FCFE |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1 | 2 | 3 | 4 | 4 |
|
PV(FCFF) |
|
|
|
|
|
|
PV(FCFE) |
|
|
|
|
|
|
FCFF Model Estimate for P0 =
FCFE Model Estimate for P0 =
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