You need to determine the intrinsic stock price of a firm using the following assumptions. The...
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You need to determine the intrinsic stock price of a firm using the following assumptions. The forecast period is five years. At the end of five years, you should calculate a residual value using the growth perpetuity method. Sales (last historical period) Sales growth rate (%) COGS (% of sales) 22.75 SG&A (% of sales) Depreciation (% of sales) 1.5** Cash income tax rate 37.0% Capital expenditures (% of sales) 2.75 Net working capital (last historical period) $2,480 million Inventory Turnover (COGS) 6.6x $67,420 million 10.0 72.0 13.5 days 34 days 4.0 Ave. Collection Period (360) Days Payable Outstanding (360) Accruals (% of sales) 5.0 Long-term FCF growth rate (%) Cost of capital (%) 8.75 **Depreciation expense is already included in COGS and/or SG&A. Note: For this firm, net working capital should be calculated as accounts receivable plus inventory minus (accounts payable + accruals). Assume the firm has $4,454 million debt outstanding and no surplus cash. If the firm has 938.6 million shares outstanding, what is the intrinsic share price? You need to determine the intrinsic stock price of a firm using the following assumptions. The forecast period is five years. At the end of five years, you should calculate a residual value using the growth perpetuity method. Sales (last historical period) Sales growth rate (%) COGS (% of sales) 22.75 SG&A (% of sales) Depreciation (% of sales) 1.5** Cash income tax rate 37.0% Capital expenditures (% of sales) 2.75 Net working capital (last historical period) $2,480 million Inventory Turnover (COGS) 6.6x $67,420 million 10.0 72.0 13.5 days 34 days 4.0 Ave. Collection Period (360) Days Payable Outstanding (360) Accruals (% of sales) 5.0 Long-term FCF growth rate (%) Cost of capital (%) 8.75 **Depreciation expense is already included in COGS and/or SG&A. Note: For this firm, net working capital should be calculated as accounts receivable plus inventory minus (accounts payable + accruals). Assume the firm has $4,454 million debt outstanding and no surplus cash. If the firm has 938.6 million shares outstanding, what is the intrinsic share price?
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Answer rating: 100% (QA)
To calculate the intrinsic share price we can use the free cash flow to the firm FCFF and the growth ... View the full answer
Related Book For
Financial Analysis with Microsoft Excel
ISBN: 978-1285432274
7th edition
Authors: Timothy R. Mayes, Todd M. Shank
Posted Date:
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