Ch10MiniCase - 44e126259e1c7207781003774fb0a244dbaa4c95.xls...

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44e126259e1c7207781003774fb0a244dbaa4c95.xls Corporate Valuation Michael C. Ehrhardt Page 1 04/06/2012 Ch 10 Mini Case 3/19/2001 Chapter 10. Mini Case Situation You have been hired as a consultant to Kulpa Fishing Supplies (KFS), a company that is seeking to increase its value. KFS has asked you to estimate the value of two privately held companies that KFS is considering acquiring. But first, the senior management of KFS would like for you to explain how to value companies that don't pay any dividends. You have structured your presentation around the following questions. Claims on Corporate Value Debt holders have the first claim on corporate value. Preferred stockholders have the next claim and the remaining is left to common stockholders. INPUT DATA SECTION: Data used for valuation (in millions) Free Cash Flow $20.0 WACC 11% Growth 5% (WACC-g) Marketable Securities $100.0 Debt $200.0 Preferred Stock $50.0 Book Value of Equity $210.0 $21.0 6.00% Vop = $350.0 Sources of Corporate Value Value of Operation $350.0 Total Corporate Value = $450.0 Value of Non-operating Assets $100.0 Claims on Corporate Value Value of Debt $200.0 Value of Preferred Stock
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Ch10MiniCase - 44e126259e1c7207781003774fb0a244dbaa4c95.xls...

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