After the third year, FCF is expected to grow at 7% annually. The WACC is 12%....

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After the third year, FCF is expected to grow at 7% annually.The WACC is 12%. $M Year 1 2 3 -30 70 90 1. What is Lincoln'sTerminal Value? 2. What is the current value of operations? 3.Suppose Lincoln has $10M in marketable securities, $100M inliabilities, and 10M shares of stock. What is Lincoln's shareprice? 4. Assume Lincoln has European investors. The original spotrate was $1.1 per 1 Euro. If the spot rate were to change to $0.9per 1 Euro, what would be the new stock price from the Europeanperspective? Would they be more or less likely to buy Lincoln stockwith the change in exchange rate (hint: there are two arguments tobe made)?

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4.4 Ratings (940 Votes)

1 FCF1 30 million FCF2 70 million and FCF3 90 million Post Year 3 the FCF grows at a perpetual constant rate of 7 per annum WACC 12 FCF4 FCF3 90 x 107 963 million Terminal Value FCF4 Wacc Perpetual growth rate 963 012 007 1926 million 2 Present See Answer

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After the third year, FCF is expected to grow at 7% annually.The WACC is 12%. $M Year 1 2 3 -30 70 90 1. What is Lincoln'sTerminal Value? 2. What is the current value of operations? 3.Suppose Lincoln has $10M in marketable securities, $100M inliabilities, and 10M shares of stock. What is Lincoln's shareprice? 4. Assume Lincoln has European investors. The original spotrate was $1.1 per 1 Euro. If the spot rate were to change to $0.9per 1 Euro, what would be the new stock price from the Europeanperspective? Would they be more or less likely to buy Lincoln stockwith the change in exchange rate (hint: there are two arguments tobe made)?