Stock Valuation & Sensitivity Analysis (*) ILOs: A1, A2, A3, B3, C1, C2, C3, D1, D2, D3, D4 You have been asked to value the shares of XYZ Corp. and have decided to use a FCF to Equity valuation approach. You have been provided with data on operating cash flows and capital expenditures below: 2020 2021 2022 Net Income $100 $140 $180 Depreciation 50 40 40 Addition to Working Capital 30 30 40 Capital Expenditures 40 50 60 After 2022, FCFE is expected to grow at a constant rate of 6% forever. The required rate of return on the stock is 12% and there are 100 shares outstanding. 01. Q2. Q3. Q4. What is the total value of the firm's equity? What is the per share value? What is sensitivity analysis? Why it is important to perform a sensitivity analysis? Using sensitivity analysis, which of the following variables has the greater effect on the valuation: a) Changes in the long-term growth rate assumption. b) Changes in the discount rate. Q5. (*) B&D Stock Valuation & Sensitivity Analysis (*) ILOs: A1, A2, A3, B3, C1, C2, C3, D1, D2, D3, D4 You have been asked to value the shares of XYZ Corp. and have decided to use a FCF to Equity valuation approach. You have been provided with data on operating cash flows and capital expenditures below: 2020 2021 2022 Net Income $100 $140 $180 Depreciation 50 40 40 Addition to Working Capital 30 30 40 Capital Expenditures 40 50 60 After 2022, FCFE is expected to grow at a constant rate of 6% forever. The required rate of return on the stock is 12% and there are 100 shares outstanding. 01. Q2. Q3. Q4. What is the total value of the firm's equity? What is the per share value? What is sensitivity analysis? Why it is important to perform a sensitivity analysis? Using sensitivity analysis, which of the following variables has the greater effect on the valuation: a) Changes in the long-term growth rate assumption. b) Changes in the discount rate. Q5. (*) B&D