Question: use excel function to calculate red form You are evaluating the stock of Duff Beer, and you have decided to use free cash flows to
You are evaluating the stock of Duff Beer, and you have decided to use free cash flows to the firm and free cash flow to equity as your two models. You project that next year Duff will have EBIT of $678 million, depreciation expense of $182 million, capital expenditure of $167 million, and an increase in net working capital of $10 million. Duff has debt of $4.8 billion, but that's not expected to change in the forese eable future. The debt generates annual interest expenses of $166 million. Duff's tax rate is 25%, its cost of equity is 12.7%, and its weighted average cost of capital is 5.0%. You project that free cash flows to the firm will grow at 0.9% lindefinitely, and that free cash flows to equity will grow at 4.4%. If Duff has 408 million shares outstanding, what is the most you would pay for a share? ( 30 points total)
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