Start with the partial model in the file Cho8 P25 Build a Model.xlsx. Selected data for...

Transcribed Image Text:

Start with the partial model in the file Cho8 P25 Build a Model.xlsx. Selected data for the Derby Corporation are shown here. Use the data to answer the questions. INPUTS (In Millions) Year Current Projected 3 4 Free cash flow -$20.0 $20.0 $80.0 $85.6 Marketable securities 40 $ 100 $ 300 Notes payable Long-term bonds Preferred stock 50 WACC 11.00% Number of shares of stock 20 a. Calculate the estimated horizon value (i.e., the value of operations at the end of the forecast period immediately after the Year-4 free cash flow). Assume growth becomes constant after Year 3. Enter your answer in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answer to two decimal places. million b. Calculate the present value of the horizon value, the present value of the free cash flows, and the estimated Year-0 value of operations. Enter your answers in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answers to two decimal places. Present value of Hv million million Present value of FCF Value of operations %24 million c. Calculate the estimated Year-0 price per share of common equity. Round your answer to the nearest cent. %24 %24 Start with the partial model in the file Cho8 P25 Build a Model.xlsx. Selected data for the Derby Corporation are shown here. Use the data to answer the questions. INPUTS (In Millions) Year Current Projected 3 4 Free cash flow -$20.0 $20.0 $80.0 $85.6 Marketable securities 40 $ 100 $ 300 Notes payable Long-term bonds Preferred stock 50 WACC 11.00% Number of shares of stock 20 a. Calculate the estimated horizon value (i.e., the value of operations at the end of the forecast period immediately after the Year-4 free cash flow). Assume growth becomes constant after Year 3. Enter your answer in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answer to two decimal places. million b. Calculate the present value of the horizon value, the present value of the free cash flows, and the estimated Year-0 value of operations. Enter your answers in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answers to two decimal places. Present value of Hv million million Present value of FCF Value of operations %24 million c. Calculate the estimated Year-0 price per share of common equity. Round your answer to the nearest cent. %24 %24

Answer rating: 100% (QA)

Estimated horizon value a growing perpetuity 856107011007 a 228980 million Growth rate i... View the full answer