Davie Corp is considering acquiring Enterprise Inc and you are on the team that is valuing the
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Davie Corp is considering acquiring Enterprise Inc and you are on the team that is valuing the potential target firm. Tiger Inc’s revenue growth rate is 10.2%, its COGS is 58% of sales, SG&A is 22% of sales, and NWC is 25% of sales. The forecast period for the valuation is 5 years, after which your team will apply a steady state growth rate is 6%. You are using a WACC rate of 13.5% and a tax rate is 32%. Initial year zero revenue is $10,000. Depreciation is $1350 per year, CAPEX is $1300 per year. The forecast period is 5 years.
- What are free cash flows per year?
- What is the terminal value (steady state value)?
- What is Enterprise Value for this firm?
- The firm has cash of $550, debt of $2000, and preferred stock of $750. What is the value of equity?
- If there are 120 shares outstanding, what is stock price?
Related Book For
Finance Applications and Theory
ISBN: 978-0077861681
3rd edition
Authors: Marcia Cornett, Troy Adair
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