You are valuing Soda City Inc. It has $150 million of debt, $70 million of cash, and 200 million shares outstanding. You estimate its cost of capital is 8.0%. You forecast that it will generate revenues of $740 million and $760 million over the next two years. The projected operating profit margin is 40%, the tax rate is 20%, the reinvestment rate is 60%, and the terminal exit value multiple at the end of year 2 is 8. 

What is your estimate of its share price?

Answer rating: 100% (QA)

Value of Debt D 150 million Cash 70 million Number of Shares Outstanding N 200 million Co... View the full answer