Question
NEED HELP ASAP Latto company has 2 million shares outstanding. Below are the forecasted sales and expenditures for the next five years: Year 0 1
NEED HELP ASAP
Latto company has 2 million shares outstanding. Below are the forecasted sales and expenditures for the next five years:
Year | 0 | 1 | 2 | 3 | 4 | 5 |
Sales and investments forecast ( millions): | ||||||
Sales | 120 | 130 | 136 | 147 | 158 | 168 |
Gross Fixed Assets | 90 | 104 | 120 | 134 | 147 | 162 |
Depreciation | 15.6 | 17 | 18.6 | 19.2 | 19.5 |
The Latto costs of goods sold, other costs, and the net working capital requirement are expected to be 70%, 15%, and 10% of sales over the years, respectively. Profits are subject to a tax rate of 30%.
Required:
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Estimate the free cash flows of Latto company for the next five years. (Rounding to two decimal places)
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Suppose that Latto only uses debt and equity as the capital, its target debt-to- value ratio is 1/3. The companys equity has a beta of 1.4. The annual risk-free rate is 3.3% and the annual market expected return is 12.3%. The cost of debt of the company is 6%. What is the weighted average cost of capital (WACC) of Latto company?
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Suppose Latto's free cash flows are expected to grow at a 5% rate beyond year 5, what is the value of ABC company?
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What is the value of equity and value per share of Latto company? (Rounding to two decimal places)
Contrary the the comments below, this is the FULL QUESTION
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