Answered step by step
Verified Expert Solution
Question
1 Approved Answer
(This question has two parts.) it is 2021. You are investigating the possibility of making an equity investment in Walkerville Woodworking Inc., a firm that
(This question has two parts.) it is 2021. You are investigating the possibility of making an equity investment in Walkerville Woodworking Inc., a firm that specializes in producing antique style furniture with a modern twist. Your research has revealed the following information: Walkerville has $8 million in excess cash and $4.5 million in debt. The company is expected to have free cash flow of $26 million in 2022 and $33 million in 2023. Beyond 2023, free cash flow is expected to grow at a constant rate of 2% per year forever. Walkerville's weighted average cost of capital (WACC) is 11% and it has 7 million shares outstanding. Question A: (5 points) What is the current enterprise value of Walkerville Woodworking given the above assumptions? O A. $353.75 million OB. $328.83 million O C. $321.02 million OD. $390.09 million O E. $357.25 million Question B: (5 points) What should be the price of one share of Walkerville stock? O A. $51.04 O B. $46.98 O C. $56.23 OD. $50.04 O E. $45.36
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started