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Not sure about answers, check and show work please 5. The multi-stage valuation model Consider the case of Flying Cow Aviation Inc.: Flying Cow Aviation
Not sure about answers, check and show work please
5. The multi-stage valuation model Consider the case of Flying Cow Aviation Inc.: Flying Cow Aviation Inc. is expected to generate a free cash flow (FCF) of $1,315,000 this year, and the FCF is expected to grow at a rate of 16% over the following two years (FCF2 and FCF3). After the third year, however, the company's FCFs are expected to grow at a constant rate of 7% per year, which will last forever (FCF 4-). If Flying Cow's weighted average cost of capital (WACC) is 14%, complete the following table and compute the current value of Flying Cow's operations. Round all dollar amounts to the nearest whole dollar, and assume that the firm does not have any nonoperating assets in its balance sheet and that all FCFs occur at the end of each year. Year CFt FCF1 $1,315,000 PV(FCF) $1,153,509 $1,338,070 $1,133,621 FCF2 $1,525,400 FCF3 FCF4 Horizon Value - $1,769,464 $1,893,326 $27,047,514 Vop = $18,256,302 $21,777,895 Flying Cow's debt has a market value of $16,333,421, and Flying Cow has no preferred stock in its capital structure. If Flying Cow has 450,000 shares of common stock outstanding, then the total value of the company's common equity is $5,444,474, and the estimated intrinsic value per share of its common stock is $12 per shareStep by Step Solution
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