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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 valuation model
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've done in previous 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. Spordyne Inc. has an expected net operating profit after taxes, EBIT(1 - T), of $13, 800 million in the coming year. In addition, the firm is expected to have net capital expenditures of $2, 070 million, and net operating working capital (NOWC) is expected to increase by $45 million. How much free cash flow (FCF) is Spordyne Inc. expected to generate over the next year? $11, 775 million $174, 250 million $15, 825 million $11, 685 million Spordyne Inc.'s FCFs are expected to grow at a constant rate of 5.70% per year in the future. The market value of Spordyne Inc.'s outstanding debt is $46, 125 million, and preferred stocks' value is $25, 625 million. Spordyne Inc. has 675 million shares of common stock outstanding, and its weighted average cost of capital (WACC) equals 17.10%. Using the preceding information and the FCF you calculated in the previous question, calculate the appropriate values in this table
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