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d. Calculate the value of operations and MVA. (Hint: first calculate the horizon value at the end of the forecast period, which is equal to
d. Calculate the value of operations and MVA. (Hint: first calculate the horizon value at the end of the forecast period, which is equal to the value of operations at the end of the forecast period. Assume that the annual growth rate beyond the horizon is 6 percent.) | |||||
Actual | Projected | Projected | Projected | Projected | |
2012 | 2013 | 2014 | 2015 | 2016 | |
Free cash flow | (5.6) | 33.4 | 71.8 | 76.1 | |
Long-term constant growth in FCF | 6.0% | ||||
Weighted average cost of capital (WACC) | 10.5% | 10.5% | 10.5% | 10.5% | 10.5% |
Horizon value | 1,793.6 | ||||
FCF in Years 1-3 and FCF4 + horizon value in Year 4 | (5.6) | 33.4 | 71.8 | 76.1 | |
Value of operations (PV of FCF + HV) | |||||
Operating capital | |||||
Market value added (MVA=Market value of company - book value of company = Value of operations - Operating capital) | |||||
e. Calculate the price per share of common equity as of 12/31/2012. | |||||
Actual | |||||
2012 | |||||
Value of Operations | |||||
Plus Value of Mkt. Sec. | |||||
Total Value of Company | |||||
Less Value of Debt | |||||
Less Value of Pref. | |||||
Value of Common Equity | |||||
Divided by number of shares | |||||
Price per share | |||||
I am looking for the formulas not the answer to calculate in the yellow boxes?
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