Question
Riskfree rate 0.02 Market rate 0.15 Use the Supernormal then Constant Growth Model and the data below to find this companys value. Forecast the free
Riskfree rate 0.02
Market rate 0.15
Use the Supernormal then Constant Growth Model and the data below to find this companys value. Forecast the free cash flows for t+1 and t+2, and the present value of the t+3 cash flows.
Beta | 1.10 |
Sales t | 1,000,000 |
Supernormal g (t+1) | 0.06 |
Constant g (after t+1) | 0.02 |
OPM | 0.200 |
Tax rate | 0.300 |
Capex % | 0.09 |
Group of answer choices
a.
| t | t+1 | t+2 | t+3 |
r | 0.163 | |||
Sales | 1,000,000 | |||
FCF | 50,000 | 51,000 | 52,020 | |
Terminal cash flow | 363,776.224 | |||
Total cash flow | 50,000 | 414,776.224 | ||
PV | 349,650.350 |
B.
t | t+1 | t+2 | t+3 | |
r | 0.163 | |||
Sales | 1,020,000 | |||
FCF | 51,000.00 | 52,020.000 | 53,060.400 | |
Terminal CF | 371,051.748 | |||
Total cash flow | 51,000.000 | 423,071.748 | ||
PV | 356,643.357 |
C.
t | t+1 | t+2 | t+3 | |
r | 0.163 | |||
Sales | 1,060,000 | |||
OPM*(1 -t) - capex % |
|
|
|
|
FCF | 53,000.00 | 54,060.000 | 55,141.200 | |
Terminal CF | 385,602.797 | |||
Total cash flow | 53,000.000 | 439,662.797 | ||
PV | 370,629.370 |
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