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Rio Corp had sales last year of $75 million. Analysts expect sales will grow 30% in year 1 and 20% in year 2. Operating profit
Rio Corp had sales last year of $75 million. Analysts expect sales will grow 30% in year 1 and 20% in year 2. Operating profit margin is 25%. Capex is 30% of annual sales. Depreciation expense is 70% of capex. Net Working Capital is 40% of sales. The WACC is 10%. The tax rate is 25%. Analysts expect a constant 4% per year growth rate in FCFF after year 3. Excess cash is $150 million, and Rio has $75 million in debt. There are 5 million shares of stock outstanding. What is your estimate of the per-share value of Rio stock?
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