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

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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)
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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...
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This note was uploaded on 10/13/2011 for the course MAFM FI516 taught by Professor Anthonycriniti during the Spring '10 term at Keller Graduate School of Management.

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

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