Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: (Click on thefollowing icon in order to copy its contents into a spreadsheet.)YearFCF ($ millions)154.4266.8377.2473.5580.7After that, the free cash flows are expected to grow at the industry average of 3.5% per year. Using the discounted freecash flow model and a weighted average cost of capital of 13.8%:a. Estimate the enterprise value of Heavy Metal.b. If Heavy Metal has no excess cash, debt of $315 million, and 37 million shares outstanding, estimate its share price.

Growth rate, g = 3.5% WACC = 13.8% The value of the enterprise at the end of year 5 is Horizon…

Answered: Heavy Metal Corporation 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

See similar textbooks

Similar questions

Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: (Click on the following icon in order to copy its contents into a spreadsheet.) Year FCF ($ million) 1 52.4 2 67.9 3 79.3 4 73.1 5 81.9 After that, the free cash flows are expected to grow at the industry average of 4.1% per year. Using the discounted free cash flow model and a weighted average cost of capital of 14.7%: a. Estimate the enterprise value of Heavy Metal. b. If Heavy Metal has no excess cash, debt of $320 million, and 44 million shares outstanding, estimate its share price.
Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: (Click on the following icon in order to copy its contents into a spreadsheet.) 1 54.6 2 67.4 3 76.9 4 74.8 Year FCF ($ millions) 5 80.7 After that, the free cash flows are expected to grow at the industry average of 3.4% per year. Using the discounted free cash flow model and a weighted average cost of capital of 13.7%: a. Estimate the enterprise value of Heavy Metal. b. If Heavy Metal has no excess cash, debt of $316 million, and 41 million shares outstanding, estimate its share price. a. Estimate the enterprise value of Heavy Metal. The enterprise value will be $ million. (Round to two decimal places.) b. If Heavy Metal has no excess cash, debt of $316 million, and 41 million shares outstanding, estimate its share price. The stock price per share will be $ (Round to two decimal places.)
Create a spreadsheet to solve , Consider the following EOY geometric sequence of cash flows and determine the P, A, and F equivalent values. The rate of increase is 20% per year after the first year, and the interest rate is 25% per year.
Kabab Co. is considering a $240,000 investment, which will provide net returns of $110,000, $160,000, and $220,000 in the second, third, and fourth years, respectively. What is the payback period? Round up to the next month Use the following table: Year Cash Outflow Cash Inflow Net Cash Flow Cumulative Cash Flow
Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: (Click on the following icon in order to copy its contents into a spreadsheet.) Year 1 2 3 4 5 FCF ($ million) 54.8 69.2 78.8 73.8 82.1 After that, the free cash flows are expected to grow at the industry average of 3.9% per year. Using the discounted free cash flow model and a weighted average cost of capital of 13.3%: a. Estimate the enterprise value of Heavy Metal. b. If Heavy Metal has no excess cash, debt of $313 million, and 45 million shares outstanding, estimate its share price.
Heath and Logan Inc. forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13%, and the FCFs are expected to continue growing at a 5% rate after Year 3. Assuming that the ROIC is expected to remain constant in Year 3 and beyond, what is the Year 0 value of operations, in millions? Year: 1 2 3 Free cash flow: ($20) $15 $45 (Round your answer to 2 decimal places.)
Dozier Corporation is a fast-growing supplier of office products. Analyst project the following free cash flows (FCFs) during the next 3 years, after which FCF is expected to grow at a constant 7 percent rate. WACC= 13 percent. Year : 0 1 2 3 FCF(RM Millions): NA - RM 20 RM 30 RM 40 (i) What is Dozier’s terminal, or horizon, value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3) (ii) What is the firm’s value today? (iii) Suppose Dozier has RM 100 million of debt and 10 million shares of stock outstanding. What is your estimate of the price per share?
UBTECH Robotics is expected to generate the following free cash flows over the next fiveyears. After which, the free cash flows are expected to grow at the industry average of 3% peryear. Using the discounted free cash flow model and the weighted average cost of capital of11%UBTECH Robotics FCF Forecast ($ Millions)Year199920002001200220032004FCF (Amount in Millions)$55$45$89$102$84$87a. Estimate the enterprise value (V0) of UBTECH Robotics.b. If UBTECH Robotics has excess cash of $5.6 Billion, a debt of $800 Million and 50 Millionshares outstanding, estimate its share price (P0).
Kabab Co. is considering a $240,000 investment, which will provide net returns of $110,000, $160,000, and $220,000 in the second, third, and fourth years, respectively. What is the payback period? Round up to the next month Use the following table: Cumulative Cash Cash Outflow Çash Inflow Net Cash Year Flow Flow 2 years and 10 months Ob. 2 years and 9 months 2 years and 11 months Od. 2 years and 8 months
Using Microsoft Excel, create an investment cash-flow diagram that will have a present worth ofzero using MARR = 14.5%. The study period needs to be exactly 8 years and each year shouldhave at least one unique cash flow that is different from the cash flows over the other years. Youranswer should contain a table showing the cash flows for each year and a graphical representationof the cash flows (cash-flow diagram)
Consider the following cash flow profile: Suppose the positive-valued cash flows are now replaced by a geometric series. If the cash flow at end of year 1 is $10,000, what geometric rate is required for the cash flow profiles to be equivalent? Interest is at a compounded annual rate of 6%.
Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: Year 1 2 3 4 5 FCF ($ million) 51.1 69.2 78.8 76.4 80.1 After that, the free cash flows are expected to grow at the industry average of 3.9% per year. Using the discounted free cash flow model and a weighted average cost of capital of 13.5%: Estimate the enterprise value of Heavy Metal. (Round to two decimalplaces.) If Heavy Metal has no excess cash, debt of $285 million, and 43 million shares outstanding, estimate its share price. (Round to two decimalplaces.)

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS