6. Consider the following projections (in $ millions) for MBI Corp.: Year 0 Sales Cost of...

Transcribed Image Text:

6. Consider the following projections (in $ millions) for MBI Corp.: Year 0 Sales Cost of Goods Sold Depreciation EBIT Taxes 380 Year 1 44 360 264 40 56 20 Gross Fixed Assets (Levels) Net Working Capital (Levels) a) Compute the free cash flow (FCF) for MBI Corp. for both Year 1 and Year 2. b) Compute the value of MBI today. The free cash flow (beyond Year 2) is expected to grow at 3% per year forever. The WACC for MBI is 9%. c) The market value of MBI's debt is $140 million and there are 5 million shares outstanding. Compute the value per share. 440 Year 2 48 384 284 43 57 22 500 50 6. Consider the following projections (in $ millions) for MBI Corp.: Year 0 Sales Cost of Goods Sold Depreciation EBIT Taxes 380 Year 1 44 360 264 40 56 20 Gross Fixed Assets (Levels) Net Working Capital (Levels) a) Compute the free cash flow (FCF) for MBI Corp. for both Year 1 and Year 2. b) Compute the value of MBI today. The free cash flow (beyond Year 2) is expected to grow at 3% per year forever. The WACC for MBI is 9%. c) The market value of MBI's debt is $140 million and there are 5 million shares outstanding. Compute the value per share. 440 Year 2 48 384 284 43 57 22 500 50

Answer rating: 100% (QA)

Solution Here are the steps to solve this problem a Compute free cash flow ... View the full answer