Allied Biscuit Co. is expected to generate a free cash flow (FCF) of $7,795.00 million this year (FCF, =$7,795.00 million), and the FCF is expected to grow at a rate of 19.00% over the following two years (FCF, and FCF). After the third year, however, the FCF is expected to grow at a constant rate of 2.10%per year, which will last forever (FCF). Assume the firm has no nonoperating assets. If Allied BiscuitCo.'s weighted average cost of capital (WACC) is 6.30 %, what is the current total firm value of AlliedBiscuit Co. ? (Note: Round all intermediate calculations to two decimal places.) $293,072.74 million $24,732.03 million $297,760.66 million $248, 133.88 million

Step 1: Calculate the FCF for the next three years.FCF1 = $7,795.00 millionFCF2 = $7,795.00 million…

Answered: Allied Biscuit Co. is expected to…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Demo Inc. is expected to generate a free cash flow (FCF) of $6,155.00 million this year (FCF, = $6,155.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF, and FCF,). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF.). Assume the firm has no nonoperating assets. If Demo Inc.'s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Demo Inc.? (Note: Round all intermediate calculations to two decimal places.) O $110,497.24 million O $18,577.33 million O $146,683.23 million O $132,596.69 million Demo Inc.'s debt has a market value of $82,873 million, and Demo Inc. has no preferred stock. If Demo Inc. has 750 million shares of common stock outstanding, what is Demo Inc.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) O $36.83 O $35.83 O $110.50 O $40.52
Acme Inc. is expected to generate a free cash flow (FCF) of $12,365.00 million this year (FCF₁ = $12,365.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Acme Inc.’s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Acme Inc.? (Note: Round all intermediate calculations to two decimal places.) $266,378.12 million $294,677.06 million $221,981.77 million $37,320.65 million Acme Inc.’s debt has a market value of $166,486 million, and Acme Inc. has no preferred stock. If Acme Inc. has 675 million shares of common stock outstanding, what is Acme Inc.’s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $246.65…
Praxis Corp. is expected to generate a free cash flow (FCF) of $5,670.00 million this year (FCF, = $5,670.00 million), and the FCF is expected to grow at a rate of 22.60% over the following two years (FCF, and FCF). After the third year, however, the FCF is expected to grow at a constant rate of 3.18% per year, which will last forever (FCF). Assume the firm has no nonoperating assets. If Praxis Corp.'s weighted average cost of capital (WACC) is 9.54%, what is the current total firm value of Praxis Corp.? (Note: Round all intermediate calculations to two decimal places.) $155,715.35 million O $17,453.56 million $122,645.86 million $147,175.03 million Praxis Corp.'s debt has a market value of $91,984 million, and Praxis Corp. has no preferred stock. If Praxis Corp. has 375 million shares of common stock outstanding, what is Praxis Corp.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $81.76 $80.76 $89.94 $245.29
Galaxy Corp. is expected to generate a free cash flow (FCF) of $6,430.00 million this year (FCF₁ = $6,430.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Galaxy Corp.’s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Galaxy Corp.? (Note: Round all intermediate calculations to two decimal places.) $153,236.96 million $115,434.20 million $19,407.34 million $138,521.04 million Galaxy Corp.’s debt has a market value of $86,576 million, and Galaxy Corp. has no preferred stock. If Galaxy Corp. has 450 million shares of common stock outstanding, what is Galaxy Corp.’s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal…
Lex Corp. is expected to generate a free cash flow (FCF) of $4,555.00 million this year (FCF, = $4,555.00 million), and the FCF is expected to grow at a rate of 21.40% over the following two years (FCF, and FCF,). After the third year, however, the FCF is expected to grow at a constant rate of 2.82% per year, which will last forever (FCF.). Assume the firm has no nonoperating assets. If Lex Corp.'s weighted average cost of capital (WACC) is 8.46%, what is the current total firm value of Lex Corp.? (Note: Round all intermediate calculations to two decimal places.) $132,100.10 million $110,083.42 million O $14,162.05 million O $136,545.92 million Lex Corp.'s debt has a market value of $82,563 million, and Lex Corp. has no preferred stock. If Lex Corp. has 525 million shares of common stock outstanding, what is Lex Corp.'s estimated Intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) O $157.26 O $57.66 O $51.42 O $52.42
Demo Inc. is expected to generate a free cash flow (FCF) of $8,715.00 million this year (FCF1 = $8,715.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF2 and FCF). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF4). Assume the firm has no nonoperating assets. If Demo Inc.'s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Demo Inc.? (Note: Round all intermediate calculations to two decimal places.) $156,455.46 million $26,304.04 million $207,691.99 million $187,746.55 million Demo Inc.'s debt has a market value of $117,342 million, and Demo Inc. has no preferred stock. If Demo Inc. has 600 million shares of common stock outstanding, what is Demo Inc.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $64.19 $71.71 $ 65.19 $195.57
ABC Telecom Inc. is expected to generate a free cash flow (FCF) of $1,570.00 million this year (FCF₁ = $1,570.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If ABC Telecom Inc.’s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of ABC Telecom Inc.? (Note: Round all intermediate calculations to two decimal places.) ABC Telecom Inc.’s debt has a market value of $21,139 million, and ABC Telecom Inc. has no preferred stock. If ABC Telecom Inc. has 675 million shares of common stock outstanding, what is ABC Telecom Inc.’s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.)
Praxis Corp. is expected to generate a free cash flow (FCF) of $12,975.00 million this year (FCF₁ = $12,975.00 million), and the FCF is expected to grow at a rate of 21.40% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 2.82% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Praxis Corp.’s weighted average cost of capital (WACC) is 8.46%, what is the current total firm value of Praxis Corp.? (Note: Round all intermediate calculations to two decimal places.) a. $376,289.47 million b. $388,953.45 million c. $313,574.56 million d. $40,340.86 million Praxis Corp.’s debt has a market value of $235,181 million, and Praxis Corp. has no preferred stock. If Praxis Corp. has 450 million shares of common stock outstanding, what is Praxis Corp.’s estimated intrinsic value per share of common stock? (Note: Round all…
Luthor Corp. is expected to generate a free cash flow (FCF) of $6,415.00 million this year (FCF₁ = $6,415.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Luthor Corp.’s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Luthor Corp.? (Note: Round all intermediate calculations to two decimal places.) A.) $152,879.38 million B.) $115,164.84 million C.) $19,362.07 million D.) $138,197.81 million Luthor Corp.’s debt has a market value of $86,374 million, and Luthor Corp. has no preferred stock. If Luthor Corp. has 675 million shares of common stock outstanding, what is Luthor Corp.’s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to…
Globex Corp. is expected to generate a free cash flow (FCF) of $145.00 million this year (FCF₁ = $145.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF2 and FCF3). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF4). Assume the firm has no nonoperating assets. If Globex Corp.'s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Globex Corp.? (Note: Round all intermediate calculations to two decimal places.) O $2,603.11 million O $3,123.73 million O $437.64 million O $3,455.59 million Globex Corp.'s debt has a market value of $1,952 million, and Globex Corp. has no preferred stock. If Globex Corp. has 375 million shares of common stock outstanding, what is Globex Corp.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) O $1.74 O $0.74 $1.91
Consider the case of Morose Otter Hydraulic Manufacturers Inc.: Morose Otter Hydraulic Manufacturers Inc. is expected to generate a free cash flow (FCF) of $210,000 this year, and the FCF is expected to grow at a rate of 18% over the following two years (FCF22 and FCF33). After the third year, however, the company’s FCFs are expected to grow at a constant rate of 8% per year, which will last forever (FCF4 - ∞4 - ∞). If Morose Otter’s weighted average cost of capital (WACC) is 16%, complete the following table and compute the current value of Morose Otter’s operations. Round all dollar amounts to the nearest whole dollar, and assume that the firm does not have any nonoperating assets in its balance sheet and that all FCFs occur at the end of each year. Year CFtt PV(FCFtt) FCF11 $210,000 $181,034 FCF22 $247,800 $184,156 FCF33 $292,404 $187,331 FCF44 $315,796 Horizon Value4- ∞4- ∞ $3,157,960 $2,180,141 Vopop = $3,081,485…
Consider the case of Morose Otter Hydraulic Manufacturers Inc.: Morose Otter Hydraulic Manufacturers Inc. is expected to generate a free cash flow (FCF) of $210,000 this year, and the FCF is expected to grow at a rate of 18% over the following two years (FCF2 and FCF3). After the third year, however, the company's FCFS are expected to grow at a constant rate of 8% per year, which will last forever (FCF4 - ). If Morose Otter's weighted average cost of capital (WACC) is 16%, complete the following table and compute the current value of Morose Otter's operations. Round all dollar amounts to the nearest whole dollar, and assume that the firm does not have any nonoperating assets in its balance sheet and that all FCFS occur at the end of each year. Year CF PV(FCF,) FCF1 $181,034 V $184,156 ▼ $210,000 FCF2 $247,800 $292,404 V $315,796 ▼ $3,157,960 v FCF3 $187,331 FCF4 Horizon Value4- 00 $2,180,141 ▼ $3,081,485 ▼ Vop

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