= Galaxy Corp. is expected to generate a free cash flow (FCF) of $13,235.00 million this year (FCF, = $13,235.00 million), and the FCF is expected to grow at a rate of 19.00% over the following two years (FCF, and FCF,). After the third year, however, the FCF is expected to grow at a constant rate of 2.10% per year, which will last forever (FCF.). Assume the firm has no nonoperating assets. If Galaxy Corp.'s weighted average cost of capital (WACC) is 6.30%, what is the current total firm value of Galaxy Corp.? (Note: Round all intermediate calculations to two decimal places.) $497,603.05 million $421,302.16 million $41,992.10 million $505,562.59 million Galaxy Corp.'s debt has a market value of $315,977 million, and Galaxy Corp. has no preferred stock. If Galaxy Corp. has 375 million shares of common stock outstanding, what is Galaxy Corp.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $842.60 $280.87 $308.95 $279.87 As companies evolve, certain factors can drive sudden growth. This may lead to a period of nonconstant, or variable, growth. This would cause the expected growth rate to increase or decrease, thereby affecting the valuation model. For companies in such situations, you would refer to the variable, or nonconstant, growth model for the valuation of the company's stock. Consider the case of Portman Industries: Portman Industries just paid a dividend of $1.92 per share. The company expects the coming year to be very profitable, and its dividend is expected to grow by 16.00% over the next year. After the next year, though, Portman's dividend is expected to grow at a constant rate of 3.20% per year. Assuming that the market is in equilibrium, use the information just given to complete the table. Term Value Dividends one year from now (D) Horizon value (@j Intrinsic value of Portman's stock The risk-free rate (TRF) is 4.00%, the market risk premium (RPM) is 4.80%, and Portman's beta is 2.00. What is the expected dividend yield Portman's stock today? O 11.45% O 10.08% O 8.33% O 10.41% Goodwin Technologies, a relatively young company, has been wildly successful but has yet to pay a dividend. An analyst forecasts that Goodwin is likely to pay its first dividend three years from now. She expects Goodwin to pay a $4.25000 dividend at that time (D = $4.25000) and believes that the dividend will grow by 22.10000% for the following two years (D, and D.). However, after the fifth year, she expects Goodwin's dividend to grow at a constant rate of 4.08000% per year. Goodwin's required return is 13.60000%. Fill in the following chart to determine Goodwin's horizon value at the horizon date (when constant growth begins) and the current intrinsic value. To increase the accuracy of your calculations, do not round your intermediate calculations, but round all final answers to two decimal places. Term Value Horizon value Current intrinsic value Assuming that the markets are in equilibrium, Goodwin's current expected dividend yield is and Goodwin's capital gains yield is Goodwin has been very successful, but it hasn't paid a dividend yet. It circulates a report to its key investors containing the following statement: Goodwin has a large selection of profitable investment opportunities. Is this statement a possible explanation for why the firm hasn't paid a dividend yet? O No 0 Yes = Galaxy Corp. is expected to generate a free cash flow (FCF) of $13,235.00 million this year (FCF, = $13,235.00 million), and the FCF is expected to grow at a rate of 19.00% over the following two years (FCF, and FCF,). After the third year, however, the FCF is expected to grow at a constant rate of 2.10% per year, which will last forever (FCF.). Assume the firm has no nonoperating assets. If Galaxy Corp.'s weighted average cost of capital (WACC) is 6.30%, what is the current total firm value of Galaxy Corp.? (Note: Round all intermediate calculations to two decimal places.) $497,603.05 million $421,302.16 million $41,992.10 million $505,562.59 million Galaxy Corp.'s debt has a market value of $315,977 million, and Galaxy Corp. has no preferred stock. If Galaxy Corp. has 375 million shares of common stock outstanding, what is Galaxy Corp.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $842.60 $280.87 $308.95 $279.87 As companies evolve, certain factors can drive sudden growth. This may lead to a period of nonconstant, or variable, growth. This would cause the expected growth rate to increase or decrease, thereby affecting the valuation model. For companies in such situations, you would refer to the variable, or nonconstant, growth model for the valuation of the company's stock. Consider the case of Portman Industries: Portman Industries just paid a dividend of $1.92 per share. The company expects the coming year to be very profitable, and its dividend is expected to grow by 16.00% over the next year. After the next year, though, Portman's dividend is expected to grow at a constant rate of 3.20% per year. Assuming that the market is in equilibrium, use the information just given to complete the table. Term Value Dividends one year from now (D) Horizon value (@j Intrinsic value of Portman's stock The risk-free rate (TRF) is 4.00%, the market risk premium (RPM) is 4.80%, and Portman's beta is 2.00. What is the expected dividend yield Portman's stock today? O 11.45% O 10.08% O 8.33% O 10.41% Goodwin Technologies, a relatively young company, has been wildly successful but has yet to pay a dividend. An analyst forecasts that Goodwin is likely to pay its first dividend three years from now. She expects Goodwin to pay a $4.25000 dividend at that time (D = $4.25000) and believes that the dividend will grow by 22.10000% for the following two years (D, and D.). However, after the fifth year, she expects Goodwin's dividend to grow at a constant rate of 4.08000% per year. Goodwin's required return is 13.60000%. Fill in the following chart to determine Goodwin's horizon value at the horizon date (when constant growth begins) and the current intrinsic value. To increase the accuracy of your calculations, do not round your intermediate calculations, but round all final answers to two decimal places. Term Value Horizon value Current intrinsic value Assuming that the markets are in equilibrium, Goodwin's current expected dividend yield is and Goodwin's capital gains yield is Goodwin has been very successful, but it hasn't paid a dividend yet. It circulates a report to its key investors containing the following statement: Goodwin has a large selection of profitable investment opportunities. Is this statement a possible explanation for why the firm hasn't paid a dividend yet? O No 0 Yes