Question: Need an answer asap, please 1. You are valuing a bank. The bank currently has assets of $315 per share. Five years from now (that
Need an answer asap, please
1. You are valuing a bank. The bank currently has assets of $315 per share. Five years from now (that is, at the end of five years), you expect their assets per share to be $455. After Year 5, you expect their assets per share to grow at 3.5 percent per year forever. The bank has an ROA of 2.2 percent and an ROE of 12.5 percent. The bank's cost of equity is 11.0 percent. What is the value of the bank's stock? Use the free cash flow to equity model to value this stock. Do not round intermediate calculations. Round your answer to the nearest cent.
$ _____________
2. You are building a free cash flow to the firm model. You expect sales to grow from $2 billion for the year that just ended to $3.8 billion five years from now. Assume that the company will not become any more or less efficient in the future. Use the following information to calculate the value of the equity on a per-share basis.
- Assume that the company currently has $660 million of net PP&E.
- The company currently has $220 million of net working capital.
- The company has operating margins of 11 percent and has an effective tax rate of 30 percent.
- The company has a weighted average cost of capital of 10 percent. This is based on a capital structure of two-thirds equity and one-third debt.
- The firm has 3 million shares outstanding.
Do not round intermediate calculations. Round your answer to the nearest cent.
$ ___________
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