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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, but it focuses on a firm's free cash flows (FCFs) instead of its dividends and works best in cases when firms don't pay dividends, or their dividends are difficult to forecast. Gadget Twin Inc. has an expected net operating profit after taxes, EBIT(1 - T), of $900 million in the coming year. In addition, the firm is expected to have net capital expenditures of $135 million, and net working capital (NWC) is expected to increase by $30 million. How much free cash flow (FCF) is Gadget Twin Inc. expected to generate over the next year? Gadget Twin Inc.'s FCF5 are expected to grow at a constant rate of 2.82% per year in the future. The market value of Gadget Twin Inc.'s outstanding debt is $5,864 million, and preferred stocks' value is $3,258 million. Gadget Twin Inc. has 450 million shares of common stock outstanding, and its weighted average cost of capital (WACC) equals 8.46%. Using the preceding information and the FCF you calculated in the previous question, calculate the appropriate values in this table
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