a. Assume that the company was operating at full capacity in 2023 about all items except...
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a. Assume that the company was operating at full capacity in 2023 about all items except fixed assets, which in 2023 were being utilized to only 80% of capacity. By what percentage could 2024 sales increase over 2023 sales without the need for an increase in fixed assets b. Suppose that in 2024, sales increase by 20% over 2023 sales. Turkey expects to maintain its 2023 dividend payout ratio, and it will raise all additional funds needed as notes payable at the end of 2024, if there is any surplus fund at the end of 2024 it will use this fund to reduce notes payables. Turkey forecasts that the interest rate on all of its interest-bearing debt is 10%. It has a tax rate of 40%. Construct the 2024 forecasted income statement and balance sheet for Turkey using all information here and from question a above. How much additional external capital (AFN) will be required? (Hints: Base the forecasted interest expense on the amount of debt at the beginning of the year, because any change in debt is done at the end of the year.) c. Forecast the 2024 free cash flow and the 2024 dividend per share (Note: present your calculations). d. Assume that it is now January 1, 2024, the forecasted FCF for 2024 is $17,120 thousand, and this FCF is expected to grow at 10% for 2025 and 8% for 2026, afterward FCFs are expected to grow at a constant rate of 5% indefinitely. The company's WACC is 16%, and stockholders require a return of 18% on Turkey's stock. Calculate the firm value and the stock price today using the corporate valuation model. e. Assume that it is now January 1, 2024, the forecasted 2024 dividend per share (DPS) is $2.17, and this DPS is expected to grow at 15% for 2025 and 12% for 2026, afterward dividends are expected to grow at a constant rate of 6% indefinitely. The company's WACC is 16%, and stockholders require a return of 18% on Turkey's stock. Calculate the stock price today using the dividend discount model. THE END E E Lecturer a. Assume that the company was operating at full capacity in 2023 about all items except fixed assets, which in 2023 were being utilized to only 80% of capacity. By what percentage could 2024 sales increase over 2023 sales without the need for an increase in fixed assets b. Suppose that in 2024, sales increase by 20% over 2023 sales. Turkey expects to maintain its 2023 dividend payout ratio, and it will raise all additional funds needed as notes payable at the end of 2024, if there is any surplus fund at the end of 2024 it will use this fund to reduce notes payables. Turkey forecasts that the interest rate on all of its interest-bearing debt is 10%. It has a tax rate of 40%. Construct the 2024 forecasted income statement and balance sheet for Turkey using all information here and from question a above. How much additional external capital (AFN) will be required? (Hints: Base the forecasted interest expense on the amount of debt at the beginning of the year, because any change in debt is done at the end of the year.) c. Forecast the 2024 free cash flow and the 2024 dividend per share (Note: present your calculations). d. Assume that it is now January 1, 2024, the forecasted FCF for 2024 is $17,120 thousand, and this FCF is expected to grow at 10% for 2025 and 8% for 2026, afterward FCFs are expected to grow at a constant rate of 5% indefinitely. The company's WACC is 16%, and stockholders require a return of 18% on Turkey's stock. Calculate the firm value and the stock price today using the corporate valuation model. e. Assume that it is now January 1, 2024, the forecasted 2024 dividend per share (DPS) is $2.17, and this DPS is expected to grow at 15% for 2025 and 12% for 2026, afterward dividends are expected to grow at a constant rate of 6% indefinitely. The company's WACC is 16%, and stockholders require a return of 18% on Turkey's stock. Calculate the stock price today using the dividend discount model. THE END E E Lecturer
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