Given the forecast below, estimate the fair market value per share of Kenmore Air's equity at the end of 2017 if the company has 50 million shares outstanding and the market value of its interest-bearing liabilities on the valuation date equals $300 million. Assume that after 2021, earnings before interest and tax will remain constant at $220 million, depreciation will equal capital expenditures in each year, and working capital will not change. Kenmore Air's weighted- average cost of capital is 11 percent and its tax rate is 40 percent. Forecast for Kenmore Air, Inc. Year 2018 2019 2020 2021 Free cash flow ($ millions) -40 85 97 112
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- Current and projected free cash flows for Radell Global Operations are shown here. Growth is expected to be constant after 2020, and the weighted average cost of capital is 11%. What is the horizon (continuing) value at 2021 if growth from 2020 remains constant?Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1 and by 5% in Year 2. Its operating profitability ratio (OP) is 10%, and its capital requirement ratio (CR) is 80%? What are the projected sales in Years 1 and 2? What are the projected amounts of net operating profit after taxes (NOPAT) for Years 1 and 2? What are the projected amounts of total net operating capital (OpCap) for Years 1 and 2? What is the projected FCF for Year 2?Assume that today is December 31, 2019, and that the following information applies to Abner Airlines: After-tax operating income [EBIT(1 - T)] for 2020 is expected to be $550 million. The depreciation expense for 2020 is expected to be $70 million. The capital expenditures for 2020 are expected to be $325 million. No change is expected in net operating working capital. The free cash flow is expected to grow at a constant rate of 6% per year. The required return on equity is 14%. The WACC is 11%. The firm has $206 million of non-operating assets. The market value of the company's debt is $4.799 billion. 70 million shares of stock are outstanding. Using the corporate valuation model approach, what should be the company's stock price today? Do not round intermediate calculations. Round your answer to the nearest cent. $
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- Bartman Industries' and Reynolds Inc.'s stock prices and dividends, along with the Winslow 5000 Index, are shown here for the period 2015-2020. The Winslow 5000 data are adjusted to include dividends. 1.) Use the data to calculate annual rates of return for Bartman, Reynolds, and the Winslow 5000 Index. Then calculate each entity's average return over the 5-year period. (Hint: Remember, returns are calculated by subtracting the beginning price from the ending price to get the capital gain or loss, adding the dividend to the capital gain or loss, and dividing the result by the beginning price. Assume that dividends are already included in the index. Also, the rates of return for 2015 are not avaiable because 2014 data are not given). Bartman Industries Reynolds Inc. Winslow 5000 Year Stock Price Dividend Holding period return Stock Price Dividend Holding period return Includes Divs. Holding period return 2020 $17.25 $1.15 $48.75 $3.00 11,663.98 2019 14.75…Net Income for Company A is $200,000 in 2014, $300,000 in 2015, $400,000 in 2016, $500,000 in 2017, and $600,000 in 2018. The expected growth for all years after 2018 is 5%, the 90-Day T-Bill Rate is 20%, and the appropriate percentage above risk-free rate is 12%. Using this information, what is the reasonable value for Company A based on its future income stream for 2014 to 2018? A. 1,394,267.03 B. 4,394,267.03 A or B?Assume that today is December 31, 2021. Use the following information that applies to Harrison Corporation to calculate what should be the company’s stock price today. After-tax operating income [EBIT (1 – T)] for 2022 is expected to be $850 million The depreciation expense for 2022 is expected to be $110 million The capital expenditures for 2022 are expected to be $650 million No change is expected in net working capital The free cash flow is expected to grow at a constant rate of 5.5% per year The required return on equity is 10% The WACC is 8% The firm has $150 million of non-operating assets The market value of the company’s debt is $3.25 billion 250 million shares of stock are outstanding Using the corporate valuation model approach, what should be the company’s stock price today?
- JenBritt Incorporated had a free cash flow (FCF) of $80 million in 2019. The firm projects FCF of $200 million in 2020 and $500 million in 2021. FCF is expected to grow at a con- stant rate of 4% in 2022 and thereafter. The weighted average cost of capital is 9%. What is the current (i.e., beginning of 2020) value of operations?Ford has the following information related to 2020: 2020 2021 - Sales $1,000,000 $1,200,000 - Current Assets 350,000. 35% 420,000 - Long-Term Assets 650,000 65% 780,000 - Current Liabilities 120,000 12% 144,000 - Long-Term Liabilities 280,000 N/A - Common Stocks 550,000. N/A - Retained Earnings 50,000. Sales are expected to grow by 20% next year with expected Net Profit Margin 20% and Dividends layout 60% Required: 1.How much discretionary Financing needed by Ford in 2021?Assume you’ve forecasted the following Net Income amounts for Chipotle over the period 2021-2030. Assuming a beta of 1.28, a risk-free rate of 1.14% and a market risk premium of 4.72%. Assume Chipotle pays “dividends” each period equal to 5.24% of net income. The beginning book value of equity equals $2,020,135. Calculate residual income and the present value of each residual income amount. (Don’t forget to calculate book value of shareholders’ equity each period.) See attatched picture for work 2. Calculate the continuing value assuming a 3% growth rate.Step 1: Multiply Net Income for 2030 by (1+g)Step 2: Multiply Book Value of Shareholder’s Equity at end of 2030 by RE (cost of equity).Step 3: Subtract Step 2 amount from Step 1 amount. This is the continuing residual income.Step 4: Assume the Step 3 amount is a perpetuity with growth (this amount will grow forever at a constant rate). Divide the Step 3 amount by (RE-g). It will be a big number. 3. Add…