3. You are asked to compute the free cash flows of a company for the next...

 

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3. You are asked to compute the free cash flows of a company for the next 5 years. You receive the following relevant selected information from the incremental earnings forecast: 5 0 Sales Costs of Goods Sold Unlevered Net Income -6.10 Depreciation 3 1 2 25.74 25.25 24.96 15.44 15.15 14.98 7.42 0.64 4 25.69 15.41 7.90 7.37 5.90 6.84 0.64 0.64 0.64 0.64 In additon, you know that 15% of sales and costs of goods sold must be allocated to the working capital. The weighted average cost of capital is 7%. The company expects a growth rate of its free cash flows of 2% after year 5. a) Compute the free cash flows of the company! b) What is the estimated firm value of the company using the Discounted Free Cash Flow Model? 3. You are asked to compute the free cash flows of a company for the next 5 years. You receive the following relevant selected information from the incremental earnings forecast: 5 0 Sales Costs of Goods Sold Unlevered Net Income -6.10 Depreciation 3 1 2 25.74 25.25 24.96 15.44 15.15 14.98 7.42 0.64 4 25.69 15.41 7.90 7.37 5.90 6.84 0.64 0.64 0.64 0.64 In additon, you know that 15% of sales and costs of goods sold must be allocated to the working capital. The weighted average cost of capital is 7%. The company expects a growth rate of its free cash flows of 2% after year 5. a) Compute the free cash flows of the company! b) What is the estimated firm value of the company using the Discounted Free Cash Flow Model?

Answer rating: 100% (QA)

Year 0 1 2 3 4 5 1Sales 2574 2525 2496 2569 2Working capital... View the full answer