Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

PLEASE SHOW ALL CALCULATIONS. THANK YOU ! Sora Industries currently has 60 million outstanding shares, $120 million in debt and $40 million in excess cash.

PLEASE SHOW ALL CALCULATIONS. THANK YOU !

Sora Industries currently has 60 million outstanding shares, $120 million in debt and $40 million in excess cash. Sales in the recently concluded financial year were $433. They are projected to grow at 8.6%, and from the second year onwards, at 5% per year. Furthermore, you are given that in the last financial year, Sora's

i) cost of goods sold was 70% of sales,

ii) selling, general and administrative expenses were 20% of sales,

iii) depreciation was 1.5% of sales,

iv) gross fixed assets were 22.5% of sales, and

v) NWC was 18% of sales.

Assuming these ratios remain constant forever, except COGS will be 68% of sales in each year moving forward. If the tax rate for the firm is 40%, and the WACC is 10%:

What is the stock price of Sora industries using FCF model?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance An Integrated Planning Approach

Authors: Ralph R Frasca

8th edition

136063039, 978-0136063032

More Books

Students also viewed these Finance questions

Question

CL I P COL Astro- L(1-cas0) Lsing *A=2 L sin(0/2)

Answered: 1 week ago

Question

In Exercises 1558, find each product. (9 - 5x) 2

Answered: 1 week ago