Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Following are forecasts of sales, NOPAT, NOA as of 12/31/20 for Day-Brite. Assuming a WACC of 6.5%, terminal growth rate of 1%, common shares outstanding

image text in transcribed
image text in transcribed
Following are forecasts of sales, NOPAT, NOA as of 12/31/20 for Day-Brite. Assuming a WACC of 6.5%, terminal growth rate of 1%, common shares outstanding of 145.5M, and NNO of $6.2M a. Estimate the value of a share of Day-Brite's common stock using the DCF method as of 12/31/20. b. Day-Brite stock closed at $425.50 on 2/21/19, the date the 10-K was filed with the SEC. How does your valuation estimate compare with this closing price? What action might you take? Forecast Horizon (5 millions) Sales 2020 Actual 54.806 2021 55,629 2022 56,463 2023 57,310 2024 58,169 Terminal Period 58,751 NOPAT 2,400 2,448 2,485 2,522 2,560 2,585 NOA 3,883 3,945 4,004 4,065 4,125 4.187 Given the 2019 actual sales by segment, provide a sales bridge to 2020 forecasted sales if expected volume increase is 3.3% across the board, sales of new products in Flavor of the Month in the amount of 325K, a 500K shift in sales from Strawberry to Vanilla and an overall realized price increase of 1% across the board 2019 Act Sales 14,396 9,865 millions Chocolate Vanilla Chocolate Chip Strawberry Flavor of the Month Total Actual Sales 8,576 4,965 2,459 40.261 Following are forecasts of sales, NOPAT, NOA as of 12/31/20 for Day-Brite. Assuming a WACC of 6.5%, terminal growth rate of 1%, common shares outstanding of 145.5M, and NNO of $6.2M a. Estimate the value of a share of Day-Brite's common stock using the DCF method as of 12/31/20. b. Day-Brite stock closed at $425.50 on 2/21/19, the date the 10-K was filed with the SEC. How does your valuation estimate compare with this closing price? What action might you take? Forecast Horizon (5 millions) Sales 2020 Actual 54.806 2021 55,629 2022 56,463 2023 57,310 2024 58,169 Terminal Period 58,751 NOPAT 2,400 2,448 2,485 2,522 2,560 2,585 NOA 3,883 3,945 4,004 4,065 4,125 4.187 Given the 2019 actual sales by segment, provide a sales bridge to 2020 forecasted sales if expected volume increase is 3.3% across the board, sales of new products in Flavor of the Month in the amount of 325K, a 500K shift in sales from Strawberry to Vanilla and an overall realized price increase of 1% across the board 2019 Act Sales 14,396 9,865 millions Chocolate Vanilla Chocolate Chip Strawberry Flavor of the Month Total Actual Sales 8,576 4,965 2,459 40.261

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

Investment Science

Authors: David G. Luenberger

1st International Edition

0195391063, 9780195391060

More Books

Students also viewed these Finance questions