Question
The company financials are given below: Net income 200m Depreciation expense 72m Interest expense 120m Increase in net working capital investment 32m Increase in fixed
The company financials are given below:
Net income | 200m | |
Depreciation expense | 72m | |
Interest expense | 120m | |
Increase in net working capital investment | 32m | |
Increase in fixed capital investment | 136m | |
Market value of debt | 1,440m | |
Cost of debt | 8.5% | |
Cost of equity | 14% | |
Tax rate | 20% | |
Constant growth rate of free cash flow (forecasted) | 4% (per year) | |
Capital Structure: | ||
Debt | 40% | |
Equity | 60% | |
Number of shares outstanding | 20,000,000 | |
Find the following:
1. Free cash flow to firm (actual):
2.Free cash flow to firm (next year forecast):
3. The weighted average cost of capital:
4.Value of the company (using FCF capitalization approach):
5.Value of equity:
6.Intrinsic value per share:
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