Dernham Inc. has an expected net operating profit after taxes, EBIT (1-T), of $10,300 million in the coming year. In addition, the firm is expected to have net capital expenditures of $1,545 milllion, and net operating working capital (NOWC) is expected to increase by $25 million. How much free cash flow (FCF) is Derhham Inc. expected to generate over the next year?
1. (Using the preceding information and the FCF you calcuated in the previous question, calculate the appropriate values below. HINT: You can assume that the firm does not have any nonoperating assets on its balance sheet)
a. 8780
b. 11820
c. 8730
d. 138961
2. Derhham Inc.'s FCFs are expected to grow at a constant rate of 5.34% per year in the future. The market value of Dernham Inc.'s oustanding debt is $36,784 million, and perferred stocks' value is $20,435 million. Derhman Inc. has 375 million shares of common stock oustanding, and its weighted average cost of capital (WACC) equals 16.02%.
a. What is the firms value______
b. Value of common equity_____
c. Intrinisic value per share_____
3. If Dernham Inc. also had $248 million in marketable secuirtes on its balance sheet, the intrinisc value per share would be______?