The income statement and reorganized balance sheet for HH Plc. are given below. (a). Determine the following
Question:
The income statement and reorganized balance sheet for HH Plc. are given below.
(a). Determine the following values for year 1: net operating profit after tax (NOPLAT), the free cash flow to firm (FCFF), and free cash flow to equity holders (FCFE).
(b). Assume HH Plc. currently has 60 million shares outstanding. Compute ExE’s equity value and price per share by using the free cash flow to equity holders (FCFE) model. Assume FCFE are growing at 5 percent. Calculate the weighted average cost of capital and the enterprise economic profit (RIF).
(c). Estimate ExE’s enterprise value using the DCF model and the growing-perpetuity formula. Assume free cash flow grows at 5 percent.
Valuation Measuring and managing the values of companies
ISBN: ?978-0470424704
5th edition
Authors: Mckinsey, Tim Koller, Marc Goedhart, David Wessel