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UBTECH Robotics is expected to generate the following free cash flows over the next five years....

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Finance

UBTECH Robotics is expected to generate the following free cashflows over the next five years. After which, the free cash flowsare expected to grow at the industry average of 3% per year. Usingthe discounted free cash flow model and the weighted average costof capital of 11%

UBTECH Robotics FCF Forecast ($ Millions) Year 1999, 2000, 2001,2002, 2003, 2004

FCF (Amount in Millions)$55, $45, $89, $102, $84, $87

a. Estimate the enterprise value (V0) of UBTECH Robotics.

b. If UBTECH Robotics has excess cash of $5.6 Billion, a debt of$800 Million and 50 Million shares outstanding, estimate its shareprice (P0).

Answer & Explanation Solved by verified expert
4.4 Ratings (670 Votes)
a EV PV of FCF To calculate the present value of free cash flows we will i Discount the FCF given for 5 years period along with ii Calculate Perpetual    See Answer
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