use the following information to develop a spreadsheet model that will calculate the free cash flows and the value of the equity for the company.  cost of capital                    12% most recent year's sales    $1000 nonoperating assets          $100  interest-bearing debt        $250 operating profit margin     12% working capital/sales          35%  fixed assets/sales                20% noninterest-bearing      current liabilities/sales     10% rax rate                                40% forecasted sales growth               years 1-2                      12%         years 3-5                       8%          years 6-∞                      4% calculate the value of the firm and the value of the equity in the firm using DCF analysis.

Entrepreneurial Finance
6th Edition
ISBN:9781337635653
Author:Leach
Publisher:Leach
Chapter14: Security Structures And Determining Enterprise Values
Section: Chapter Questions
Problem 8EP
icon
Related questions
Question
100%

use the following information to develop a spreadsheet model that will calculate the free cash flows and the value of the equity for the company. 

cost of capital                    12%

most recent year's sales    $1000

nonoperating assets          $100 

interest-bearing debt        $250

operating profit margin     12%

working capital/sales          35% 

fixed assets/sales                20%

noninterest-bearing 

    current liabilities/sales     10%

rax rate                                40%

forecasted sales growth      

        years 1-2                      12%

        years 3-5                       8% 

        years 6-∞                      4%

calculate the value of the firm and the value of the equity in the firm using DCF analysis. 

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 3 images

Blurred answer
Knowledge Booster
Capital Budgeting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Entrepreneurial Finance
Entrepreneurial Finance
Finance
ISBN:
9781337635653
Author:
Leach
Publisher:
Cengage
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Financial Reporting, Financial Statement Analysis…
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Intermediate Financial Management (MindTap Course…
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning