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  3. 1. 2 you are valuing soda city inc. it has...

1. 2 You are valuing Soda City Inc. It has...

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Accounting

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You are valuing Soda City Inc. It has $100 million of debt, $90 million of cash, and 150 million shares outstanding. You estimate its cost of capital is 13.0%. You forecast that it will generate revenues of $700 million and $800 million over the next two years. Projected operating profit margin is 20%, tax rate is 30%, reinvestment rate is 20%, and terminal exit value multiple at the end of year 2 is 15. What is your estimate of its share price? Round to one decimal place. (Hint: Compute projected FCFF for years 1 and 2 based on info provided, compute terminal value using the exit multiple method, discount it all to find EV, walk the bridge to Equity, divide by number of shares outstanding.) Numeric Answer: What's the FCFF of a company with total revenues of $700 million, operating profit margin of 50%, tax rate of 20% and reinvestment rate of 80%? Answer in millions, rounded to one decimal place. Numeric

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