Question
Q1.: At the beginning of its fiscal year 2021, an analyst made the following forecast for Generic Inc., the consumer foods company, for 2021-2023 (in
Q1.: At the beginning of its fiscal year 2021, an analyst made the following forecast for Generic Inc., the consumer foods company, for 2021-2023 (in millions of dollars): 2021F 2022F 2023F 2024F Free cash flow to equity holders 1,714 1,677 1,653 1,637 Use a required return of 9 percent. Assume that free cash flow will grow at 3 percent per year after 2024. Develop an Excel template to calculate the following: a) present value of FCFE over 2021-2024. b) present value of the terminal value of FCFE beyond 2024 c) total value of the firm d) Generic had 369 million shares outstanding at the end of 2020, trading at $47 per share. Calculate value per share. e) Based on the given data, what should be the investment strategy?
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