{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

FI515_W7_Project_BrianLin

# FI515_W7_Project_BrianLin - Horizon Value 2011 = \$741.152M...

This preview shows pages 1–2. Sign up to view the full content.

Brian Lin D01278742 Week 7 Project Week 7 Project Problem 13-10 The financial statements of Lioi Steel Fabricators are shown below – both the actual results for 2010 and the projections for 2011. Free cash flow is expected to grow at a 6% rate after 2011. The weighted average cost of capital is 11%. a. If operating capital as of 12/31/2010 is \$502.2 million, what is the free cash flow for 12/31/2011? Tax Rate = 40% Free Cash Flow = NOPAT – Investment in Operating Capital Free Cash Flow = EBIT * (1 - T) – (Net Operating Capital 2010 – Net Operating Capital 2011 ) Free Cash Flow = 108.6 * (1 – 0.4) – (502.2 – (134.9+397.5)) Free Cash Flow = \$34.96M b. What is the horizon value as of 12/31/2011? Horizon Value 2011 = (FCF 2011 * (1 + g))/(WACC – g) Horizon Value 2011 = (34.96 * (1 + 0.06))/(0.11-0.06)

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Horizon Value 2011 = \$741.152M c. What is the total value of operations as of 12/31/2010? Value of Operations = PV of Horizon Value @ WACC + PV of FCF @ WACC Value of Operations = -PV(11%,1,0,741.152) + NPV(11%,34.96) Value of Operations = \$699.20M d. What is the total value of the company as of 12/31/2010? Total Value of the Company = Value of Operations + Value of Non-Operating Assets Total Value of the Company = 699.20 + 49.90 Total Value of the Company = \$749.10M e. What is the intrinsic price per share for 12/31/2010? Intrinsic Price per Share = (Total Value of Co. – Value of Debt – Value of Pref. Stock)/# of Shares Intrinsic Price per Share = (749.10 – (69.9 + 140.8) – 35)/10 Intrinsic Price per Share = 503.40/10 Intrinsic Price per Share = \$50.34...
View Full Document

{[ snackBarMessage ]}