You have the following information from Athene's income statement: thousand USD 2014 2013 2012 Sales 200,000...

 

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You have the following information from Athene's income statement: thousand USD 2014 2013 2012 Sales 200,000 160,000 120,000 Food costs 58,000 46,400 34,800 % of sales 0.29 0.29 0.29 Labor costs 50,000 38,400 30,000 % of sales 0.25 0.24 0.25 Occupancy costs 36,000 27,200 21,600 % of sales 0.18 0.17 0.18 SG&A 30,000 24,000 14,400 % of sales 0.15 0.15 0.12 Depreciation 10,000 6,400 4,800 % of sales 0.05 0.04 0.04 Pre-opening costs 10,000 11,200 8,400 % of sales 0.05 0.07 0.07 EBIT 6,000 6,400 6,000 10:13 12 10 14 COMPA... 11/11 15 COMPA... be 16 M&A@! AN T 21 SUSTAIN... E *O 43% final_20... abc a) Using this information, forecast the sales of Athene in 2015 to 2020. (1 point) b) Compute the unlevered free cash flow of Athene in 2015. (1 point) c) Forecast the unlevered free cash flow of Athene until 2020. (1 point) d) Since Athene just had its IPO, we do not have sufficient data to estimate its beta from historical returns. However, we know that Aegon's equity beta is 0.76. The book value of Aegon's debt is 15 billion. Aegon has a book value of equity of 13 billion, and a market capitalization of 90 billion. Aegon operates under a constant D/E ratio. The tax rate for Aegon is 30%. Using this information, compute the unlevered beta for Aegon. (4 points) e) Athene plans to operate under a constant D/E ratio of 1/9. Using Aegon as a comparable firm, compute the equity beta for Athene. (2 points) f) Estimate Athene's WACC, assuming that the risk-free rate is 2.35%, the market risk premium is 4%, and Athene's cost of debt is 3.5%. (3 points) g) Find the present value at the beginning of 2015 of the free cash flows of Athene in years 2015 to 2020 (assume that all cash flows occur at the end of each period). (2 points) h) Find the enterprise value for Athene. (4 points) You have the following balance sheet information (in thousand US dollars). Cash and Cash Equivalents 5,400 Accounts Receivable 6,600 Inventory 1,200 Prepaid Expenses 2,800 PP&E 140,000 Other Assets 10,000 Total Assets 166,000 Accounts Payable 13,000 Short-term Debt 64,000 Accrued Expenses 11,000 Long-term Debt 52,000 Total Liabilities 140,000 Stockholder Equity 26,000 i) Using the information, estimate the equity value for Athene. If there are 7 million shares outstanding, what is the fair value of the stock price? (2 points) You have the following information from Athene's income statement: thousand USD 2014 2013 2012 Sales 200,000 160,000 120,000 Food costs 58,000 46,400 34,800 % of sales 0.29 0.29 0.29 Labor costs 50,000 38,400 30,000 % of sales 0.25 0.24 0.25 Occupancy costs 36,000 27,200 21,600 % of sales 0.18 0.17 0.18 SG&A 30,000 24,000 14,400 % of sales 0.15 0.15 0.12 Depreciation 10,000 6,400 4,800 % of sales 0.05 0.04 0.04 Pre-opening costs 10,000 11,200 8,400 % of sales 0.05 0.07 0.07 EBIT 6,000 6,400 6,000 10:13 12 10 14 COMPA... 11/11 15 COMPA... be 16 M&A@! AN T 21 SUSTAIN... E *O 43% final_20... abc a) Using this information, forecast the sales of Athene in 2015 to 2020. (1 point) b) Compute the unlevered free cash flow of Athene in 2015. (1 point) c) Forecast the unlevered free cash flow of Athene until 2020. (1 point) d) Since Athene just had its IPO, we do not have sufficient data to estimate its beta from historical returns. However, we know that Aegon's equity beta is 0.76. The book value of Aegon's debt is 15 billion. Aegon has a book value of equity of 13 billion, and a market capitalization of 90 billion. Aegon operates under a constant D/E ratio. The tax rate for Aegon is 30%. Using this information, compute the unlevered beta for Aegon. (4 points) e) Athene plans to operate under a constant D/E ratio of 1/9. Using Aegon as a comparable firm, compute the equity beta for Athene. (2 points) f) Estimate Athene's WACC, assuming that the risk-free rate is 2.35%, the market risk premium is 4%, and Athene's cost of debt is 3.5%. (3 points) g) Find the present value at the beginning of 2015 of the free cash flows of Athene in years 2015 to 2020 (assume that all cash flows occur at the end of each period). (2 points) h) Find the enterprise value for Athene. (4 points) You have the following balance sheet information (in thousand US dollars). Cash and Cash Equivalents 5,400 Accounts Receivable 6,600 Inventory 1,200 Prepaid Expenses 2,800 PP&E 140,000 Other Assets 10,000 Total Assets 166,000 Accounts Payable 13,000 Short-term Debt 64,000 Accrued Expenses 11,000 Long-term Debt 52,000 Total Liabilities 140,000 Stockholder Equity 26,000 i) Using the information, estimate the equity value for Athene. If there are 7 million shares outstanding, what is the fair value of the stock price? (2 points)