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plz You are in your first year as financial analyst within a large corporation which is considering a new acquisition (TagCo)to support its long term

plz You are in your first year as financial analyst within a large corporation which is considering a new acquisition (TagCo)to support its long term growth.You have been given the following information on TagCo:

  • Current Free Cash Flow to the Firm (FCFF) =$745 millions
  • Outstanding shares= 309.39 million
  • Equity beta = 0.90, risk-free rate = 5.04%; equity risk premium = 5.5%
  • Cost of debt = 7.1%
  • Marginal tax rate = 34%
  • Capital structure: 20% debt, 80% equity
  • Long-term debt = $1.518 billion
  • Growth rate of FCFF =
  • 8.8% annually in years 1-4;
  • 7.4% in year 5, 6.0% in year 6, 4.6% in year 7;
  • 3.2% in year 8 and thereafter.

Required:

From the information provided to you above, estimate the following:

a) TagCoWeighted Average Cost of Capital (WACC);

b) Total value of the firm;

c) Total value of equity;

d) Value per share.

Show all your calculations to derive the above estimates.

  1. Thats all the info we have .....

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