You have been asked to value Sonata Inc., a manufacturer of musical keyboards for computers. The...

 

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You have been asked to value Sonata Inc., a manufacturer of musical keyboards for computers. The company has estimated its free cash flows to equity and its cost of equity for the next 4 years. The earnings per share are expected to grow 6% a year after year 4, and net capital expenditures are expected to decline 50% after year 4. Sonata currently has a beta of 1.5 and no debt or working capital needs, but expects its beta to drop to 1 after year 4. The debt ratio will remain at 0%. Assume the T.Bond rate is 5.25% and market risk premium is 5.5%. Estimate the terminal and current value of equity. Fill in the missing fields in the following table. For this question, first calculate all parts without rounding the solutions. Then, when inserting your solutions in the fields, round to two decimals. Also, use dot as the decimal separator. Insert a minus for negative value (if any). Year EPS FCFE PV 1 $1.50 -$2.00 X 2 $1.80 -$1.20 X Terminal value of equity per share Current value of equity per share 6A 3 $2.16 $0.34 X GA $2.59 $0.09 X Terminal Year $ 25,54 X $ 0,89 x x X You have been asked to value Sonata Inc., a manufacturer of musical keyboards for computers. The company has estimated its free cash flows to equity and its cost of equity for the next 4 years. The earnings per share are expected to grow 6% a year after year 4, and net capital expenditures are expected to decline 50% after year 4. Sonata currently has a beta of 1.5 and no debt or working capital needs, but expects its beta to drop to 1 after year 4. The debt ratio will remain at 0%. Assume the T.Bond rate is 5.25% and market risk premium is 5.5%. Estimate the terminal and current value of equity. Fill in the missing fields in the following table. For this question, first calculate all parts without rounding the solutions. Then, when inserting your solutions in the fields, round to two decimals. Also, use dot as the decimal separator. Insert a minus for negative value (if any). Year EPS FCFE PV 1 $1.50 -$2.00 X 2 $1.80 -$1.20 X Terminal value of equity per share Current value of equity per share 6A 3 $2.16 $0.34 X GA $2.59 $0.09 X Terminal Year $ 25,54 X $ 0,89 x x X

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