The BC security analyst group needs to make investment recommendation as of September 31, 2012 for...
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The BC security analyst group needs to make investment recommendation as of September 31, 2012 for Best Buy to its clients. To estimate a fundamental value of the company, the group has decided to use a DCF method using a cost of capital of 10.21%. On September 31,2020, the number of shares outstanding is $ 336.7 million and the price per share is $25.20. The cash flow projections for the next five year is summarized in the below table. Period Ending March 31 (Unit: $ Million) EBIT Depreciation & Amortization Deferred Taxes Others Changes in Working Capital Capital Expenditures Taxes Total Unlevered Free Cash Flows 1. The PV of for the next five years is 3. The estimated enterprise value (EV) of Best Buy is the nearest tenth.) 4. The fundamental stock price per share would be 2013 E 1,502.4 951.7 (30.0) 0.0 (296.5) (749.5) (508.7) 869.4 5. Based on the above value, the analyst group can make a 2014 E 1,319.6 989.3 (134.0) 0.0 35.9 26.3 (770.5) (760.0) 2015 E 1,236.3 1,026.4 28.0 0.0 (446.8) (418.6) 993.5 1,138.3 . (Round to the nearest tenth.) 2. When the company's EV/EBITDA multiple is 5.3, the terminal value (i.e., EV) in year 5 using the multiple method would be to the nearest tenth.) 2016 E 1,157.3 1,060.1 (30.0) 0.0 25.8 (693.) (391.9) 1,128.3 and the equity value is 2017 E 1,144.9 1,094.7 (134.0) 0.0 (Round to the nearest tenth.) (12.6) (683.3) (387.7) 1,022.0 and the present value of the terminal value would be when the amount of Net Debt, Non-controlling interests, and preferred securities is $ 1,546.0 MM. (Round to recommendation (i.e., buy or sell) because the current stock of BEST BUY is (Round (i.e., overvalued or undervalued.). The BC security analyst group needs to make investment recommendation as of September 31, 2012 for Best Buy to its clients. To estimate a fundamental value of the company, the group has decided to use a DCF method using a cost of capital of 10.21%. On September 31,2020, the number of shares outstanding is $ 336.7 million and the price per share is $25.20. The cash flow projections for the next five year is summarized in the below table. Period Ending March 31 (Unit: $ Million) EBIT Depreciation & Amortization Deferred Taxes Others Changes in Working Capital Capital Expenditures Taxes Total Unlevered Free Cash Flows 1. The PV of for the next five years is 3. The estimated enterprise value (EV) of Best Buy is the nearest tenth.) 4. The fundamental stock price per share would be 2013 E 1,502.4 951.7 (30.0) 0.0 (296.5) (749.5) (508.7) 869.4 5. Based on the above value, the analyst group can make a 2014 E 1,319.6 989.3 (134.0) 0.0 35.9 26.3 (770.5) (760.0) 2015 E 1,236.3 1,026.4 28.0 0.0 (446.8) (418.6) 993.5 1,138.3 . (Round to the nearest tenth.) 2. When the company's EV/EBITDA multiple is 5.3, the terminal value (i.e., EV) in year 5 using the multiple method would be to the nearest tenth.) 2016 E 1,157.3 1,060.1 (30.0) 0.0 25.8 (693.) (391.9) 1,128.3 and the equity value is 2017 E 1,144.9 1,094.7 (134.0) 0.0 (Round to the nearest tenth.) (12.6) (683.3) (387.7) 1,022.0 and the present value of the terminal value would be when the amount of Net Debt, Non-controlling interests, and preferred securities is $ 1,546.0 MM. (Round to recommendation (i.e., buy or sell) because the current stock of BEST BUY is (Round (i.e., overvalued or undervalued.).
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Lets break down the calculations step by step 1 Present Value of Free Cash Flows for the next five years PV fracCF11 r1 fracCF21 r2 fracCF31 r3 fracCF... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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