Purchase Solution

Corporate Valuation Model

Not what you're looking for?

Ask Custom Question

Use the Corporate Value model and the following data to calculate a firm's total intrinsic (current) value and intrinsic value per share:

1st yr: PBT = $1 million; Net capital investment = $200,000
2nd yr: PBT = $1.2 million; Net capital investment = $250,000
3rd yr: PBT = $1.3 million; Net capital investment - $125,000

Tax rate = $40% for all three years
WACC (k) = 10%

After the first three years, long run constant g fcf = 5%
Debt = $2 million
There are 500,000 shares outstanding

Also, show formulas and entries on financial calculator.

Purchase this Solution

Solution Summary

This explains the steps to compute the corporate value with the help of example.

Solution Preview

Use the Corporate Value model and the following data to calculate a firm's total intrinsic (current) value and intrinsic value per share:

1st yr: PBT = $1 million; Net capital investment = $200,000
2nd yr: PBT = $1.2 million; Net capital investment = $250,000
3rd yr: PBT = $1.3 million; Net capital investment - $125,000

Tax rate = $40% for all three years
WACC (k) = 10%

After the first three years, long run constant g ...

Purchase this Solution


Free BrainMass Quizzes
Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Introduction to Finance

This quiz test introductory finance topics.

Basics of corporate finance

These questions will test you on your knowledge of finance.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.