Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Tropetech Inc.'s FCFs are expected to grow at a constant rate of 3.54% per year in the future. The market value of Tropetech Inc.'s



image

 

Tropetech Inc.'s FCFs are expected to grow at a constant rate of 3.54% per year in the future. The market value of Tropetech Inc.'s outstanding debt is $87,744 million, and its preferred stocks' value is $48,746 million. Tropetech Inc. has 750 million shares of common stock outstanding, and its weighted average cost of capital (WACC) equals 10.62%. Term Total firm value Intrinsic value of common equity Intrinsic value per share Value (Millions) 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. Grade It Now Save & Continue 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. Tropetech Inc. has an expected net operating profit after taxes, EBIT(1-T), of $16,300 million in the coming year. In addition, the firm is expected to have net capital expenditures of $2,445 million, and net operating working capital (NOWC) is expected to increase by $50 million. How much free cash flow (FCF) is Tropetech Inc. expected to generate over the next year?

Step by Step Solution

3.38 Rating (154 Votes )

There are 3 Steps involved in it

Step: 1

The question is asking for the calculation of the Free Cash Flow FCF for Trope Tech Inc in the comin... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management Theory and Practice

Authors: Eugene F. Brigham, Michael C. Ehrhardt

15th edition

130563229X, 978-1305632301, 1305632303, 978-0357685877, 978-1305886902, 1305886909, 978-1305632295

More Books

Students also viewed these Finance questions