Suppose you forecasted these cash flows given below in the year 2006 for the years 2007 to 2011lowa given when the shares were traded at $ 1.05 2006 2007 2008 2009 2010 2011 Cash flows from operations 4060 | 4450 4800 | 5170 5510 Cash investment 1030 1220 1250 960 700 The book value of net debt is $5,100,000. The continuing value for perpetuity can be taken at a growth of 5%. The required rate of return is 9%. Free cash flows are expected to grow at 5% per year after 2011. Shares outstanding were 90,000,000. Required: Calculate value of equity in 2006 and value to price ratio.

Suppose you forecasted these cash flows given below in the year 2006 for the years 2007 to 2011lowa given when the shares were traded at $ 1.05 2006 2007 2008 2009 2010 2011 Cash flows from operations 4060 | 4450 4800 | 5170 5510 Cash investment 1030 1220 1250 960 700 The book value of net debt is $5,100,000. The continuing value for perpetuity can be taken at a growth of 5%. The required rate of return is 9%. Free cash flows are expected to grow at 5% per year after 2011. Shares outstanding were 90,000,000. Required: Calculate value of equity in 2006 and value to price ratio.

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 25SP: Start with the partial model in the file Ch07 P25 Build a Model.xlsx on the textbook’s Web site....

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