Question
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?
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