Question
You have been asked to value the shares of Delta Corp (an all-equity firm) and have decided to use a FCF to Equity valuation approach.
You have been asked to value the shares of Delta Corp (an all-equity firm) and have decided to use a FCF to Equity valuation approach. You have been provided with data on operating cash flows and capital expenditures below:
|
| 2021 | 2022 | 2023 |
| Net Income | $150 | $180 | $240 |
| Depreciation | $40 | $50 | $50 |
| Addition to Working Capital | $30 | $40 | $60 |
| Capital Expenditures | $40 | $60 | $60 |
After 2023, FCFE is expected to grow at a constant rate of 5% forever. The required rate of return on the stock is 12% and there are 100 share outstanding.
Q1. What is your estimate to the Terminal Value (TV)?
Q2. What is your estimate to the total value of the firms equity?
Q3. What is your estimate to the per share value?
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1st Edition
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