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Recalculate the intrinsic value of Honda shares using the free cash flow model of Spreadsheet under each

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Recalculate the intrinsic value of Honda shares using the free cash flow model of Spreadsheet under each of the following assumptions. Treat each scenario independently.
a. Honda€™s P/E ratio starting in 2013 will be 16.
b. Honda€™s unlevered beta is 0.8.
c. The market risk premium is9%.
Recalculate the intrinsic value of Honda shares using the free
Free Cash Flow
Free cash flow (FCF) represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. Unlike earnings or net income, free cash flow is a measure of profitability that excludes the...
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1 2 A. Input data 30.0026.25 2 22.5018.75 4 Cap spending/shr 5 LT Debt 2.7 27500 25000 24000 23000 22000 1810 11券 10 | B. Cash flow calculations 891.9 84.2 4320.0 1313.3 1313.3 1313.3 6000.0 6000.0 000.0 6000.0 4253.5 4595.8 4938.2 5280.5 Terminal value 1293.4 4875.0 5450.0 6025.0 108545.5 219 C. Discount rate calculations from Value Line 22 Unlevered beta 0.725 24 甥ǐ tax_rate ●kd咸 YTM in 2010 on A+ rated LT debt 27 market risk prem Row 3 x Row 11 linear trend from initial to final value 0.27 0.23 30 Levered beta 32 WACC 33 PV factor for FCFF 34 PV factor for FCFE 35 1000 0.902 0.816 year at k equity D. Present values 1193 1/13 433878145 296358574 9208564585 6526265262 พา

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The solutions derived from Spreadsheet are as follows Intrinsic value FCFF Intrinsic value FCFE Intr...View the full answer


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Pushpinder Singh
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The present value of future cash flows is calculated to determine the value today of a stream of future cash flows. It is calculated by discounting the future cash flows to their present value using a discount rate. The discount rate reflects the time value of money and the risk of the cash flows. It is important because it helps in making investment decisions, capital budgeting, loan decision making, and financial planning. By discounting future cash flows to their present value using a discount rate, it takes into account the time value of money and the risk associated with the cash flows. This allows investors, lenders, and financial planners to evaluate the viability of potential investments, projects, or loan applications, and to estimate the future value of investments or savings. calculating the present value of future cash flows is important in making investment decisions, capital budgeting, loan decision making, and financial planning. It helps to determine the viability of long-term projects, evaluate loan applications, and estimate the future value of investments or savings.

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