8 Copy%20of DCF FCF valuation Trux Ltd is a listed company in the heavy vehicle industry....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
8 Copy%20of DCF FCF valuation Trux Ltd is a listed company in the heavy vehicle industry. The market value of Trux Ltd's net debt is $800 million and the company has 250 million shares outstanding. Use this information to help answer the questions below. (a) An analyst has collected the following information and wants to estimate the value of Trux's shares using the discounted free cash flow (FCF) model: Trux's FCF was $100 million in year 0 (historical FCF in the year just passed). Trux expects its FCF to grow by 10% per year for the next three years (in year 1, year 2 and year 3). Trux expects its FCF to grow by 4% per year indefinitely thereafter. The cost of equity is 15%. • The cost of debt is 5%. • The weighted average cost of capital is 12%. Using the discounted free cash flow model and the information above, the the enterprise value of Trux is $ million. Note: Please provide your answer as an integer in $ million without commas in the format of xxxx (for example, if the answer is $1,234.56 million, type in 1235). (b) Suppose that a different analyst believes that the enterprise value of Trux Ltd is $2,000 million. According to this analyst the equity value per share of Trux Ltd is $ Note: Please provide your answer with two decimal points in the format of xx.xx (for example, if the answe is $1.234, type in 1.23). 8 Copy%20of DCF FCF valuation Trux Ltd is a listed company in the heavy vehicle industry. The market value of Trux Ltd's net debt is $800 million and the company has 250 million shares outstanding. Use this information to help answer the questions below. (a) An analyst has collected the following information and wants to estimate the value of Trux's shares using the discounted free cash flow (FCF) model: Trux's FCF was $100 million in year 0 (historical FCF in the year just passed). Trux expects its FCF to grow by 10% per year for the next three years (in year 1, year 2 and year 3). Trux expects its FCF to grow by 4% per year indefinitely thereafter. The cost of equity is 15%. • The cost of debt is 5%. • The weighted average cost of capital is 12%. Using the discounted free cash flow model and the information above, the the enterprise value of Trux is $ million. Note: Please provide your answer as an integer in $ million without commas in the format of xxxx (for example, if the answer is $1,234.56 million, type in 1235). (b) Suppose that a different analyst believes that the enterprise value of Trux Ltd is $2,000 million. According to this analyst the equity value per share of Trux Ltd is $ Note: Please provide your answer with two decimal points in the format of xx.xx (for example, if the answe is $1.234, type in 1.23).
Expert Answer:
Answer rating: 100% (QA)
a Enterprise value market value of equity market value of debt cash 800 million 800 million 0 m... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
For students who graduated from high school in 2013, their SAT math scores are approximately normally distributed with a mean of 514 points and a standard deviation of 118 points. a. A student who...
-
For students who graduated from high school in 2013, their SAT math scores were approximately normally distributed with a mean of 514 points and a standard deviation of 118 points (Source: College...
-
For students who graduated from high school in 2013, their SAT math scores had a mean of 514 points and a standard deviation of 118 points. a. Assuming the SAT math scores are normally distributed,...
-
The controller of Northwest Hardware has just received two forecasts for sales in the Montana District for the coming year. Based on an econometric analysis of consumer spending and economic trends,...
-
Match the partial list of column headings for Pete Moores synoptic journal on the next page to the statements following the list. Use only one number for each letter. 1. Cash Cr. 2. Accounts Payable...
-
Ethyl alcohol at 20C, flowing in a 6-cm-diameter pipe, is metered through a 3-cm-diameter long-radius flow nozzle. If the measured pressure drop is 45 kPa, what is the estimated flow rate in m3/h?
-
I spent time with you. It seems that this deed is out of character for you. You were not awarded your normal annual bonus. I would probably feel the same. Is that what happened? You normally wouldnt...
-
Monte Services, Inc. is trying to establish the standard labor cost of a typical oil change. The following data have been collected from time and motion studies conducted over the past month. Actual...
-
If the trend towards authoritarianism continues and more democracies move towards the totalitarian side of the spectrum, how could that affect the international political system?
-
W&S Partners has just won the January 31, 2026, audit for Cloud 9. As a part of the risk assessment phase for the new audit, the audit team needs to gain an understanding of Cloud 9's structure and...
-
Figure above shows a simply supported beam being loaded a shown. The cross-section of the beam is also shown above. It is doubly symmetrical. Determine the vertical reactions at A and D in kN. Draw...
-
Part 2 Write a 500-750 word rationale and reflection on developing instruction. Include the following: Explain how your instructional choices in the lesson plan meet the needs of all students, and...
-
Charlie Chaplin, the 'silent comedian,' made in 1940. It is considered one of the great speeches of all time: How does listening to this speech make you feel? What do you think makes it an effective...
-
1) Why would I put these "hat Walk On By" and "T's a While Industry" on the course the same wock? How are hay under? How we Poy ales i? 7) How is Brent Staples' tone in "Just Walk On By" different...
-
BCC is completely acceptable in business/professional work. Do you use BCC? If so, for what reasons? Does it really matter if you use BCC or not, as for email you can just simply forward the email...
-
A series, or stream, of cash flows may not always necessarily be an annuity. Cash flows can also be uneven and nonconstant, but the concept of the time value of money applies to uneven cash flows as...
-
Use the UML below to create the following classes and interfaces: class Person class InvalidDriverException extends Exception class Vehicle interface Announcements class Car extends Vehicle...
-
Imagine a sound wave with a frequency of 1.10 kHz propagating with a speed of 330 m/s. Determine the phase difference in radians between any two points on the wave separated by 10.0 cm.
-
The most likely ways (transmission routes) women and men acquired HIV and the percentages are described by the pie charts in Figs. 27 and 28 for women and men, respectively. Figure 27 Figure 28 a....
-
The city and highway gas mileages (in miles per gallon) of all cars are described by the histograms in Fig 142 and Fig 143, respectively. Fig. 142 Fig. 143 a. Describe the shapes of the...
-
For fall semester 2014, part-time students at Centenary College paid $575 per credit (unit or hour) for tuition and paid a mandatory part-time student fee of $15 per semester (Source: Centenary...
-
One point on a horizontal circular wire \(\mathrm{C}\) of radius \(R\) is attached to a thin, vertical axle which turns at constant angular velocity \(\Omega\) about the vertical axis, causing...
-
A frictionless slide is constructed in the shape of a cycloid. The horizontal coordinate x and vertical coordinate y of the slide are given in parametric form by where \(A\) is a constant. Here the...
-
The wire described in the preceding problem is now forced to rotate about its vertical axis of symmetry with constant angular velocity \(\Omega\). (a) Find \(\Omega_{c}\), the critical value of...
Study smarter with the SolutionInn App