Your CFO has asked you to analyze the attached financial statements. In addition, you are provided the following information:
Cost of debt 7%
Cost of equity 20%
Tax rate 25%
FCF Terminal Growth Rate 2%
Assume that the firm's net income is the best indicator of the firm's future free cash flows. Using the free cash flow approach to valuation, what was the firm's value and stock price at the end of most recent calendar year?

You should be sure to include an explanation of any assumptions and be sure to forecast no less than 5 years for your analysis.?

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Consolidated Statement of Income Statement - USD ($) $ in Millions Income Statement [Abstract] Net sales Cost of goods sold Selling, general and administrative expense Operating profit Interest expense Other income (expense), net Income before income taxes Income taxes Earnings (loss) from unconsolidated entities Net income Net income (loss) attributable to noncontrolling interests Net income attributable to company Basic Diluted Price Per Share Jan. 01, 2022 12 Months Ended Jan. 02, 2021 $ 14,181 9,621 2,808 1,752 223 437 1,966 474 3 1,495 7 $ 1,488 $4.36 $4.33 64.42 $ 13,770 9,043 2,966 1,761 281 121 1,601 323 (14) 1,264 13 $ 1,251 $ 3.65 $ 3.63 62.23 Dec. 28, 2019 $ 13,578 9,197 2,980 1,401 284 188 1,305 321 (7) 977 17 $ 960 $ 2.81 $ 2.80 69.16 Consolidated Statement of Income Statement - USD ($) $ in Millions Income Statement [Abstract] Net sales Cost of goods sold Selling, general and administrative expense Operating profit Interest expense Other income (expense), net Income before income taxes Income taxes Earnings (loss) from unconsolidated entities Net income Net income (loss) attributable to noncontrolling interests Net income attributable to company Basic Diluted Price Per Share Jan. 01, 2022 12 Months Ended Jan. 02, 2021 $ 14,181 9,621 2,808 1,752 223 437 1,966 474 3 1,495 7 $ 1,488 $4.36 $4.33 64.42 $ 13,770 9,043 2,966 1,761 281 121 1,601 323 (14) 1,264 13 $ 1,251 $ 3.65 $ 3.63 62.23 Dec. 28, 2019 $ 13,578 9,197 2,980 1,401 284 188 1,305 321 (7) 977 17 $ 960 $ 2.81 $ 2.80 69.16

Answer rating: 100% (QA)

To estimate the firms value using the free cash flow FCF approach to valuation we would need to do the following 1 Project the Free Cash Flows FCF for at least the next five years 2 Calculate the term... View the full answer