Question
Forecast ABC Company's free cash flow, assuming ABC's market share will increase by 0.25% per year; investment, financing, and depreciation will be adjusted accordingly. Free
Forecast ABC Company's free cash flow, assuming ABC's market share will increase by 0.25% per year; investment, financing, and depreciation will be adjusted accordingly.
| Free Cash Flow (million) | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 |
| Net Income | $97.174 | $112.532 | $110.754 | $115.276 | $133.798 | $154.098 |
| After-Tax Interest Expense | 2.107 | 2.107 | 2.107 | 11.467 | 11.467 | 11.467 |
| Depreciation | 76.888 | 76.202 | 103.572 | 104.426 | 105.182 | 105.854 |
| Increases in Net Working Capital | 0.000 | 40.698 | 43.666 | 47.586 | 51.870 | 56.574 |
| Capital Expenditures | 70.000 | 70.000 | 392.000 | 112.000 | 112.000 | 112.000 |
| Free Cash Flow | $ | $ | $ | $ | $ | $ |
Given the EBITDA for ABC Company, calculate the continuation value of ABC, assuming an EBITDA multiple of 11.
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | |
| EBITDA (million) | $16.476 | $18.116 | $19.875 | $21.792 | $23.882 | $26.162 |
Answer: The estimated continuation value is $ million. (Round to three decimal places.)
Given the answers from the previous questionsnamely, the free cash flows you have estimated and the continuation value you just calculatedassuming a cost of capital of 12%, compute the value of operation for KMS.
Answer: The value of operation for ABC is $
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Contemporary Business Mathematics with Canadian Applications
Authors: S. A. Hummelbrunner, Kelly Halliday, Ali R. Hassanlou, K. Suzanne Coombs
11th edition
134141083, 978-0134141084
