None Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: (Click on the following icon in order to copy its contents into a spreadsheet.)YearFCF ($ millions)153.0268.0378.0475.0582.0After that, the free cash flows are expected to grow at the industry average of 4.0% per year. Using the discounted free cash flow model and a weighted average cost of capital of 14.0%:a. Estimate the enterprise value of Heavy Metal.b. If Heavy Metal has no excess cash, debt of $300 million, and 40 million shares outstanding, estimate its share price.a. Estimate the enterprise value of Heavy Metal.The enterprise value will be $ million. (Round to two decimal places.)b. If Heavy Metal has no excess cash, debt of $300 million, and 40 million shares outstanding, estimate its share price.The stock price per share will be $(Round to two decimal places.)

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Answered: a. Estimate the enterprise value of…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter21: Dynamic Capital Structures And Corporate Valuation

Section: Chapter Questions

Problem 9P

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Assume that an investment of 100,000 produces a net cash flow of 60,000 per year for two years. The discount factor for year 1 is 0.89 and for year 2 is 0.80. The NPV is a. 0 b. 6,800 c. 1,400 d. (4,000)
Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: (Click on the following icon in order to copy its contents into a spreadsheet.) Year FCF ($ million) 1 52.4 2 67.9 3 79.3 4 73.1 5 81.9 After that, the free cash flows are expected to grow at the industry average of 4.1% per year. Using the discounted free cash flow model and a weighted average cost of capital of 14.7%: a. Estimate the enterprise value of Heavy Metal. b. If Heavy Metal has no excess cash, debt of $320 million, and 44 million shares outstanding, estimate its share price.
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UBTECH Robotics is expected to generate the following free cash flows over the next fiveyears. After which, the free cash flows are expected to grow at the industry average of 3% peryear. Using the discounted free cash flow model and the weighted average cost of capital of11%UBTECH Robotics FCF Forecast ($ Millions)Year 1999 2000 2001 2002 2003 2004FCF (Amount in Millions)$55 $45 $89 $102 $84 $87a. 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 Millionshares outstanding, estimate its share price (P0).

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a. Estimate the enterprise value of Heavy Metal. b. If Heavy Metal has no excess cash, debt of $300 million, and 40 million shares outstanding, estimate its share price.