a) Ram Corporation Ltd is a listed company. The firms' CFO has gathered data (06Marks) for...

 

Transcribed Image Text:

a) Ram Corporation Ltd is a listed company. The firms' CFO has gathered data (06Marks) for 6 M performing the valuation using the Free Cash Flow Model. The firms' WACC is 12% and it has Rs.14,00,000 of Debt at market value and Rs. 5,00,000 of preferred stock at its assumed market value. The estimated free cash flows over the next five years from 2007 to 2011 are given below. Beyond 2011 to infinity, the firm expects its free cash flow to grow by 4% annually Year Free Cash Flow 2007 Rs.2,50,000 2008 Rs.2,90,000 2009 Rs.3,20,000 2010 Rs.3,60,000 2011 Rs.4,00,000 i) Estimate the value of Ram Corporations' entire company by using Free Cash Flow Approach ii) Using (a) along with the data provided above, to find Ram Corporation's Equity Value iii) If the firm plans to issue 2,20,000 equity shares, what is the estimated value per share? a) Ram Corporation Ltd is a listed company. The firms' CFO has gathered data (06Marks) for 6 M performing the valuation using the Free Cash Flow Model. The firms' WACC is 12% and it has Rs.14,00,000 of Debt at market value and Rs. 5,00,000 of preferred stock at its assumed market value. The estimated free cash flows over the next five years from 2007 to 2011 are given below. Beyond 2011 to infinity, the firm expects its free cash flow to grow by 4% annually Year Free Cash Flow 2007 Rs.2,50,000 2008 Rs.2,90,000 2009 Rs.3,20,000 2010 Rs.3,60,000 2011 Rs.4,00,000 i) Estimate the value of Ram Corporations' entire company by using Free Cash Flow Approach ii) Using (a) along with the data provided above, to find Ram Corporation's Equity Value iii) If the firm plans to issue 2,20,000 equity shares, what is the estimated value per share?

Answer rating: 100% (QA)

To estimate the value of Ram Corporation Ltd using the Free Cash Flow FCF approach we need to discou... View the full answer