Fi 515 Wk 7 Project

In: Business and Management

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(13-10) a. | | | (All amouts in million except per unit values) | 2010 | 2011 | Operating Current Assets (cash+ AR + Inv) | $164.3 | $174.20 | Less: Operating Current Liab (A/P + Accruals) | (37.10) | (39.30) | = Net Operating Work Cap | $127.20 | $134.90 | Add: Net Plant and Equipment | $375.0 | $397.50 | = Total Net Operating Capital | $502.20 | $532.40 | Investment in Operating Capital | | $30.20 | Earnings Before Interest and Taxes | $102.5 | $108.65 | x (1 - Tax Rate) | 60% | 60% | NOPAT | $61.50 | $65.19 | Less: Investment in Operating Capital | | $30.20 | | | | Free Cash Flow ($ millions) | | $34.96 |

b) | | | FCFN | = | FCFN-1 x (1 + g) | FCF2012 | = | FCF2011 x (1 + g) | g | = | 6% | WACC | | 11% | Value of FirmLAST YEAR | = | FCFLAST YEAR (1 + g) | | | WACC - g | Horizon Value, V0-2011 | = | FCF2011 x (1 + g) | | | WACC - g | | = | $34.96 x (1+ 0.6) | | | 11% - 6% | Horizon Value in 2011 | = | $741.152 |

c) | | | Add: Free Cash Flow in 2011 | | $34.96 | Value of operations in 2011 ($741.152+$34.96) | | $776.11 | PVIF@11% | | 0.9009 | | | | PV of Horizon Value in 2010 (0.901 x $776.11), $ millions | = | $699.20 | | | |

d) | | | | Non-operating Assets = Marketable Securities + Investment in Other Business | Marketable Securities | | $49.9 | | Investment in Other Business | | 0 | | Total Intrinsic Value = Value of operations + Non-operating Assets | | Total Intrinsic Value of the Company ($699.2 + $49.9), in $ millions | $749.10 | | | | |

e) | | | Total Intrinsic Value of Firm | $749.10 | | Less Notes Payable | (69.90) | | Less Long Term Bonds | (140.80) | | Less: Preferred Stock | (35.00) | | Intrinsic Value of Common Stock | 503.40 | | | | | Total Number of…...

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