fin374c formulas - 0 + g. = $36.08 million non-constant...

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s forecasted sales for the coming year, and S is the forecasted increase in sales, M is the profit margin, and RR is the percentage of earning 0 = $68,965.52 without additional funds being needed. FCF 1 = 2.00(1.05) = $2.1 million; g = 5%; b = 1.4; r RF = 5%; RP M = 6%; w d = 30%; T = 40%; r d = 8% V ops = ? P 0 = ? r s = r RF + RP M (b) r s = r RF + b i (r M – r RF ). = 5% + 6%(1.4) = 13.4%. WACC = w d r d (1-T) + w s r s = 0.30(8%)(0.60) + 0.70(13.4%) = 10.82% V ops = = DCF equation for a constant growth stock: r s = D 0 / P
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Unformatted text preview: 0 + g. = $36.08 million non-constant growth stock: P 0 = V S = V ops debt = 36.08 10.82 = $25.26 million Price = 25.26 million / 1 million shares = $25.26 / share. FCF can be calculated as follows: FCF = NOPAT Required investment in operating assets, where NOPAT = EBIT(1 T), Investment = Net Operating W.C. + Net F.A. = [ Op. C.A. - (A/P and Accruals)] + Net F. A. r = r* + IP + DRP + LP + MRP...
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This note was uploaded on 05/10/2008 for the course FIN 374C taught by Professor Goldreyer during the Spring '08 term at University of Texas at Austin.

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