Question
Sora Industries has 61 million outstandingshares, $130 million indebt, $51 million incash, and the following projected free cash flow for the next four years LOADING...
Sora Industries has 61 million outstandingshares, $130 million indebt, $51 million incash, and the following projected free cash flow for the next four years LOADING...
:
a. SupposeSora's revenue and free cash flow are expected to grow at a 4.0% rate beyond year 4. IfSora's weighted average cost of capital is 12.0%, what is the value ofSora's stock based on thisinformation?
Free Cash flow for Year 1=25.3, Year 2= 24.6, Year 3=30.8, Year 4=33.3
V0= 25.3/(1+.120)+24.6/(1+.120)^2+30.8/(1+.120)^3+33.3/(1+.120)^4+1/(1+.120)^4*33.3*(1+.040)/.12-.040
V0=360.41 Is SUPPOSED to be the answer... I cannot get this ...I keep getting 36881.74
**I set it up like above, HOWEVER I cannot get the correct answer. I feel like I am just not putting it into calculator correctly. Any direction would be helpful. THANKS!
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started