Question
You are valuing Soda City Inc. It has $118 million of debt, $83 million of cash, and 168 million shares outstanding. You estimate its cost
You are valuing Soda City Inc. It has $118 million of debt, $83 million of cash, and 168 million shares outstanding. You estimate its cost of capital is 11.2%. You forecast that it will generate revenues of $714 million and $786 million over the next two years, after which it will grow at a stable rate in perpetuity. Projected operating profit margin is 27%, tax rate is 26%, reinvestment rate is 34%, and terminal EV/FCFF exit multiple at the end of year 2 is 13. What is your estimate of its share value? Round to one decimal place.
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