Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. you are valuing soda city inc. it has $132 million

You are valuing Soda City Inc. It has $132 million of debt, $77 million of...

80.2K

Verified Solution

Question

Finance

You are valuing Soda City Inc. It has $132 million of debt, $77 million of cash, and 182 million shares outstanding. You estimate its cost of capital is 9.8%. You forecast that it will generate revenues of $726 million and $774 million over the next two years, after which it will grow at a stable rate in perpetuity. Projected operating profit margin is 33%, tax rate is 24%, reinvestment rate is 46%, and terminal EV/FCFF exit multiple at the end of year 2 is 11. 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.]

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Given the following information about your firm’s capital structure, calculate your firm’s WACC (assume the corporate...

Finance
Q

In a two-dimensional vortex flow, the fluid flows in circular paths around the center of the...

Mechanical Engineering
Q

The point of connection between two sister chromatids before anaphase II of meiosis separates them...

Biology
Q

10 The outer surface of a transparent glass slab of refractive index g 1 5...

Physics
Q

98 A sample of 16 small bags of the same brand of candies was selected...

Statistics
Q

Describe the real solutions for the equation 4x 9x 7 0 OTwo distinct real solutions...

Algebra
Q

The direction cosines of the line passing through the two points(-2,4,-5) and (1, 2, 3)(A)...

Algebra
Q

3 2x a 86 b C

Algebra
Q

Review What would be the next step in solving the following equation for x 2x...

Algebra
Q

Higher Ltd. purchased a large piece of earth-moving equipment for $5,100,000. The vehicle had six...

Accounting
Q

sandhill division operating results include controllable margin 310000 sales revenue 2410000 operating assets 1000000 sandhill...

Accounting
Q

I need the answer as soon as possible % [ + 1 :...

Accounting