Allen_Berk_DeMarzo_Problem_9-19_Start
xlsx
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East Carolina University *
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Subject
Finance
Date
Feb 20, 2024
Type
xlsx
Pages
4
Uploaded by lexinallen2000
Problem 9-19
Year
1
2
3
FCF (millions)
$53
$68
$78
a.
Estimate the enterprise value of Heavy Metal.
b.
If Heavy Metal has no excess cash, debt of $300 million, and 40 million
Cost of capital
14.00%
Long-run growth rate
4.00%
Year
1
2
3
FCF (millions)
$53.00
$68.00
$78.00
Terminal value (millions)
Total cash flow (millions)
$53.00
$68.00
$78.00
a.
Estimate the enterprise value of Heavy Metal.
Enterprise value (millions)
b.
If Heavy Metal has no excess cash, debt of $300 million, and 40 million
Debt (millions)
$300.00
Complete the steps below using cell references to given data or previous c
is all you need. To copy/paste a formula across a row or down a column, a
reference may be preferred. If a specific Excel function is to be used, the d
not type in numerical data into a cell or function. Instead, make a referen
your computations only in the blue cells highlighted below. In all cases, un
appearance of the data in your formulas, usually the Given Data section.
Heavy Metal Corporation is expected to generate the following free cash flow
After then, the free cash flows are expected to grow at the industry average of
model and a weighted average cost of capital of 14%:
Number of shares (millions)
40 Equity value (millions)
Stock price
Requirements
1.
Start Excel - completed.
2.
3.
4.
5.
6.
7.
Save the workbook. Close the workbook and then exit Excel. Submit th
In cell G19
, by using cell references, calculate the terminal value of the
In cell G20
, by using cell references, calculate the total cash flow for ye
In cell D24
, by using cell references and the function NPV
, calculate th
In cell D31
, by using cell references, calculate the equity value of the co
In cell D32
, by using cell references, calculate the stock price (1 pt.)
.
4
5
$75
$82
n shares outstanding, estimate its share price.
4
5
$75.00
$82.00
n shares outstanding, estimate its share price.
calculations. In some cases, a simple cell reference an absolute cell reference or a mixed cell directions will specify the use of that function. Do nce to the cell in which the data is found. Make nless otherwise directed, use the earliest ws over the next five years:
f 4% per year. Using the discounted free cash flow
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he workbook as directed.
e company at the end of year 4 (1 pt.)
.
ear 4 (1 pt.)
.
he enterprise value of the company (1 pt.)
.
ompany (1 pt.)
.
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