5i) You being an investment expert in firm is doing a valuation of TechnoCraft stock using...
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5i) You being an investment expert in firm is doing a valuation of TechnoCraft stock using the following information: 2021 sales per share - Rs100. Net profit margin-20%. • Net new investment in fixed capital -30% of sales increase (50% of these investments is financed with debt). Investment in working capital -20% of sales increase. Beta 1.3. Risk-free rate -4%. Equity risk premium - 6%.. He forecasts the following future sales pattern for the company: Sales Growth Forecast 2022 13% . . 2023 11% 2024 9% 2025 7% 2026 5% 2027 5% What would bethe company's stock worth? Work out all steps required to arrive at the answer. (10) Infinite 5% 5i) You being an investment expert in firm is doing a valuation of TechnoCraft stock using the following information: 2021 sales per share - Rs100. Net profit margin-20%. • Net new investment in fixed capital -30% of sales increase (50% of these investments is financed with debt). Investment in working capital -20% of sales increase. Beta 1.3. Risk-free rate -4%. Equity risk premium - 6%.. He forecasts the following future sales pattern for the company: Sales Growth Forecast 2022 13% . . 2023 11% 2024 9% 2025 7% 2026 5% 2027 5% What would bethe company's stock worth? Work out all steps required to arrive at the answer. (10) Infinite 5%
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Answer rating: 100% (QA)
To value TechnoCraft stock we can use the discounted cash flow DCF method This involves forecasting the future cash flows of the company and discounting them to their present value Here are the steps ... View the full answer
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