Recalculate the intrinsic value of Honda shares using the free cash flow model of Spreadsheet under each
Question:
a. Hondas P/E ratio starting in 2013 will be 16.
b. Hondas unlevered beta is 0.8.
c. The market risk premium is9%. Free Cash Flow
Free cash flow (FCF) represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. Unlike earnings or net income, free cash flow is a measure of profitability that excludes the...
1 2 A. Input data 30.0026.25 2 22.5018.75 4 Cap spending/shr 5 LT Debt 2.7 27500 25000 24000 23000 22000 1810 11券 10 | B. Cash flow calculations 891.9 84.2 4320.0 1313.3 1313.3 1313.3 6000.0 6000.0 000.0 6000.0 4253.5 4595.8 4938.2 5280.5 Terminal value 1293.4 4875.0 5450.0 6025.0 108545.5 219 C. Discount rate calculations from Value Line 22 Unlevered beta 0.725 24 甥ǐ tax_rate ●kd咸 YTM in 2010 on A+ rated LT debt 27 market risk prem Row 3 x Row 11 linear trend from initial to final value 0.27 0.23 30 Levered beta 32 WACC 33 PV factor for FCFF 34 PV factor for FCFE 35 1000 0.902 0.816 year at k equity D. Present values 1193 1/13 433878145 296358574 9208564585 6526265262 พา
Step by Step Answer:
The solutions derived from Spreadsheet are as follows Intrinsic value FCFF Intrinsic value FCFE Intr...View the full answer
Related Video
The present value of future cash flows is calculated to determine the value today of a stream of future cash flows. It is calculated by discounting the future cash flows to their present value using a discount rate. The discount rate reflects the time value of money and the risk of the cash flows. It is important because it helps in making investment decisions, capital budgeting, loan decision making, and financial planning. By discounting future cash flows to their present value using a discount rate, it takes into account the time value of money and the risk associated with the cash flows. This allows investors, lenders, and financial planners to evaluate the viability of potential investments, projects, or loan applications, and to estimate the future value of investments or savings. calculating the present value of future cash flows is important in making investment decisions, capital budgeting, loan decision making, and financial planning. It helps to determine the viability of long-term projects, evaluate loan applications, and estimate the future value of investments or savings.
Students also viewed these Accounting questions
-
Recalculate the intrinsic value of GE's shares using the free cash flow model of Spreadsheet 13.2 (available in Connect; link to Chapter 13 material). Treat each scenario independently. a. GE's P/E...
-
Recalculate the intrinsic value of GE using the three-stage growth model of Spreadsheet 13.1 (available in Connect; link to Chapter 13 material). Treat each of the following scenarios independently....
-
Using a multi-growth free cash flow model (MGF model), where free cash flows grow at the rate g s for n=4 years then at a constant rate g thereafter, what is the intrinsic value per share for Acme...
-
Use a calculator to express each number in Problems 39 and 40 as a decimal to the capacity of your calculator. Observe the repeating decimal representation of the rational numbers and the non...
-
D'Andre surveyed a randomly chosen group of 15 teachers at his school and asked them how many students were enrolled in their third-period classes. Here is the data set he collected. {27, 29, 18, 34,...
-
The stream function for an incompressible flow field is given by the equation \[ \psi=3 x^{2} y-y^{3} \] where the stream function has the units of \(\mathrm{m}^{2} / \mathrm{s}\) with \(x\) and...
-
Height and weight in humans tend to be correlated because they are the result of lots of similar experiences in an individual's life and the person's genetic traits. Name two variables that may not...
-
Woofer Pet Foods produces a low-calorie dog food for overweight dogs. This product is made from beef products and grain. Each pound of beef costs $0.90, and each pound of grain costs $0.60. A pound...
-
A site is available at a purchase price of GH 1 5 0 , 0 0 0 and it is anticipated that planning permission could be obtained for a factory of 7 5 0 0 m 2 or an office block of 1 7 5 0 0 m 2 . The...
-
Bug-Off Exterminators provides pest control services and sells extermination products manufactured by other companies. The following six-column table contains the company's unadjusted trial balance...
-
Recalculate the intrinsic value of Honda in each of the following scenarios by using the three stage growth model of Spreadsheet. Treat each scenario independently. a. ROE in the constant-growth...
-
The Duo Growth Company just paid a dividend of $1 per share. The dividend is expected to grow at a rate of 25% per year for the next 3 years and then to level off to 5% per year forever. You think...
-
Why might physicians resort to calling HDLs and LDLs "good" and "bad"?
-
Looking just at the present, how will the changes in the way care is provided (delivery) change the needs of the patient who wants to be more involved in the decisions of their care?
-
Day Wave Company sells three products, Dusk, Dawn, and Twilight. Income statement data for the Company's current year is provided below: Unit Sales Dusk 5,000 Dawn 10,000 Twilight 15,000 Totals...
-
Crane Company purchased a delivery truck for $32,000 on July 1, 2025. The truck has an expected salvag value of $6,000, and is expected to be driven 100,000 miles over its estimated useful life of 8...
-
Are ASPE 1506 and IAS 8 similar. What are the differences? Explain.
-
Barton Industries has operating income for the year of $3,400,000 and a 25% tax rate. Its total invested capital is $20,000,000 and its after-tax percentage cost of capital is 6%. What is the firm's...
-
What do the terms kickback and self-referral describe in the healthcare setting?
-
When a company has a contract involving multiple performance obligations, how must the company recognize revenue?
-
What are the four mutually exclusive categories used in activity-based cost accounting?
-
a. Pamela Itsuji, a currency trader for a Japanese bank, is evaluating the price of a 6-month Japanese yen/U.S. dollar currency futures contract. She gathers the following currency and interest rate...
-
Janice Delsing, a U.S.-based portfolio manager, manages an $800 million portfolio ($600 million in stocks and $200 million in bonds). In reaction to anticipated short-term market events, Delsing...
-
You are provided the information outlined as follows to be used in solving this problem. Situation A. A fixed-income manager holding a $20 million market value position of U.S. Treasury 11% bonds...
-
Kayaks!Incorporated manufactures a line of sea kayaks and accessories in a make-to-stock environment. These products are sold to boat dealers and major depart ment stores throughout North America,...
-
Merbau Furniture is a main manufacturer of custom-made office furniture in Ipoh, Perak. The company applies job order costing system, where each client's order is treated as separate job. The company...
-
National Fibre Ltd. Chairs manufactures chairs and provides the following information: Fixed Cost R50,000 for this year Variable cost R25 per chair Capacity 2000 chairs per year Selling price R75 per...
Study smarter with the SolutionInn App