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Next year, Soggy Otter is expected to earn an EBIT of $5,000,000, and to pay a federal-plus-state tax rate of 30%. It also expects to
Next year, Soggy Otter is expected to earn an EBIT of $5,000,000, and to pay a federal-plus-state tax rate of 30%. It also expects to make $1,250,000 in new capital expenditures to support this level of business activity, as well as $45,000 in additional net operating working capital (NOWC). Given these expectations, it is reasonable to conclude that next year Soggy Otter will generate an annual free cash flow (FCF) of (rounded to the nearest whole dollar). Next, based on your estimate of Soggy Otter's next year's FCF and making the stated assumptions, complete the following table: Soggy Otter can sustain this annual FCF forever, Value Attributes of Soggy Otter Total Entity Value Value of Common Equity Intrinsic value (per share) the company has a weighted average cost of capital of 17.10%, the market value of debt and preferred stock are $5,802,632 and $3,223,684 respectively, the company does not currently own any marketable securities, and there are 67,500 shares of Soggy Otter outstanding
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