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The corporate valuation model, the price-to-earnings ( P/E) multiple approach, and the economic value added (EVA) approach are some examples of valuation techniques. The corporate
The corporate valuation model, the price-to-earnings ( P/E) multiple approach, and the economic value added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you' problems, but it focuses on a firm's free cash flows (FCFs) instead of its dividends. Some firms don't pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model. Sally Rubber Co. has an expected net operating profit after taxes, EBIT(1 - T), of $16,500 million in the coming year. In addition, the firm is expecte to have net capital expenditures of $2,475 million, and net operating working capital (NOWC) is expected to increase by $45 million. How much free cash flow (FCF) is Sally Rubber Co. expected to generate over the next year? $238,614 million $14,070 million $18,930 million $13,980 million Sally Rubber Co.'s FCFs are expected to grow at a constant rate of 4.98% per year in the future. The market value of Sally Rubber Co.'s outstanding debt is $63,163 million, and its preferred stocks' value is $35,090 million. Sally Rubber Co. has 675 million shares of common stock outstanding, and its weighted average cost of capital (WACC) equals 14.94%. Using the preceding information and the FCF you calculated in the previous question, calculate the appropriate values in this table. Assume the firm has no nonoperating assets
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