Valuation 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 focuses on a firm's free cash flow (FCFS) instead of its dividends. Some firms dont 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(1-1), of $2.400 million in the coming year. In addition, the firm is expected to have net capital expenditures of $360 million, and networking capital (NWC) is expected to increase by $45 milion. How much free cash flow (FC) is Trapetech Inc. expected to generate over the next year? $43,481 million $2,085 million O $1,995 million O $2,715 million Tropetech Inc.'s FOPs are expected to grow at a constant rate of 3.90% per year in the future. The market value of Tropetech Inc. outstanding debt is $11,510 million, and preferred stocks' value is $6,394 million. Tropetech Inc. has 675 million shares of common stock outstanding, and its weighted average cost of capital (WACC) equals 11.70%. Value (Millions) Term Total firm value Value of common equity Intrinsic value per share Using the preceding information and the FCF you calculated in the previous question, calculate the appropriate values in this table Ch 09: Assignment - Stocks and Their Valuation Back to Assignment Attempts: 1 Keep the Highest: 1/2 8. Valuing preferred stock Companies that have preferred stock outstanding promise to pay a stated dividend for an infinite period. Preferred stock is treated like a perpetuity if the payments last forever. Preferred stocks are considered to be a hybrid of a stock and a bond. For example, one of the major differences between preferred shares and bonds is that the issuing companies can suspend the payment of their preferred dividends without throwing the company into bankruptcy. However, similar to bonds, preferred stockholders receive a fixed payment-their dividend-before the company's residual earings are paid out to its common stockholders and, as with common stock, preferred stockholders can benefit from an appreciation in the value of the firm's stock securities. Consider the following case of National Petroleum Refiners Corporation (NPR): National Petroleum Refiners Corporation (NPR) pays an annual dividend rate of 9.40% on its preferred stock that currently returns 12.60% and has a par value of $100.00 per share. What is the value of NPR's preferred stock? $74.60 per share O $100.00 per share $111.90 per share $89.52 per share Suppose that due to high inflation, interest rates rise and pull the preferred stock's yield to 16.38%. The value of the preferred stock will Grade it Now Save & Continue Continue without saving