Please Give Step by Step AnswerOtherwise i give DISLIKES !! Sinaloa Appliance, Incorporated, a private firm that manufactures home appliances, has hired you to estimate the company's beta. Youhave obtained the following equity betas for publicly traded firms that also manufacture home appliances.($ millions)FirmiRobotMiddleby'sNational PrestoNewell BrandsWhirlpoolBetaDebtMarket Value ofEquity0.99$ 0$ 3,4901.947770.1901.1411,9681.844,5457,61090427,27014,610a. Estimate an asset beta for Sinaloa Appliance.Note: Round intermediate calculations and final answer to 3 decimal places.Asset beta

Step 1:iRobot = 0.99 x 3,490/3,490+0 = 0.99Middleby's = 1.94 x 7,610/7,610+777 = 1.760National…

Answered: Sinaloa Appliance, Incorporated, a…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Assume that you have an opportunity to buy the stock of CoolTech, Inc., an IPO being offered for $10.78 per share. Although you are very much interested in owning the company, you are concerned about whether it is fairly priced. To determine the value of the shares, you have decided to apply the free cash flow valuation model to the firm's financial data that you've accumulated from a variety of data sources. The key values you have compiled are summarized in the following table, a. Use the free cash flow valuation model to estimate CoolTech's common stock value per share. b. Judging by your finding in part a and the stock's offering price, should you buy the stock? c. On further analysis, you find that the growth rate in FCF beyond year 4will be 5% rather than 4%. What effect would this finding have on your responses in parts a and b?
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