Question
You want to estimate todays fair price of La Tienda Inc. (assume today is January 1, 2021). The company will experience a growth period of
You want to estimate todays fair price of La Tienda Inc. (assume today is January 1, 2021). The company will experience a growth period of 4 years (2021 to 2024) as displayed in selected financial information below. After the growth period the company will have a stable growth rate equal to the risk free rate of 2%. Additional assumptions are:
Capex is are 20% of the EBIT.
Tax rate is 30%
WACC is 6%
Short term debt = zero
The number of shares outstanding is 100,000.
Assume Redundant Assets = zero
1) What are the Operative Cash Flows for 2021? select A, B or C
2) What are the Changes in Networking capital for 2022? select E, F, or G
3) What is the Present Value of the Terminal Value (today =January 1 2021)? select H, I, or J
4) What is the fair price of the Stock today? select K, L or M?
Assume today is January 1,2021Step 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