Reference no: EM131357775
You are trying to value Zombie Games Inc,, a company that manufactures games for the major game systems. You have been provided the following information:
The firm generated $ 30 million as operating profit (EBIT) in the most recent year and the corporate tax rate is 40%.
The gross capital expenditures incurred in developing new games was $ 12 million in the most recent year and depreciation was$ 5 million.
The non-cash working capital increased by $ 4 million during the course of the last year
The cost of capital for the company is 10%
a. Assuming that the after-tax operating income, capital expenditures, depreciation and non-cash working capital all are expected to grow 15% a year for the next 3 years, estimate the free cash flows to the firm (FCFF) each year for the next three years.
b. After the year 3, the high growth period for the company ends and the after-tax operating income (e.g. NOPAT) will start to grow by 3% forever. You also anticipate that the company is going to re-invest 20% of its NOPAT each year. This investment includes both, capital investments and working capital investments. Estimate the terminal value of the firm and discount it to present day
c. If the firm has 100 million in debt, $20 million in liquid financial securities and 10 million shares outstanding, estimate the value per share today
d. Compute the EV/EBITDA measure and explain what it means. Note that the EV/EBITDA ratios for the major competitors of Zombie Games is 12.0.
|
Describe the variousrivalries depicted
: a) Describe the variousrivalries depicted in this scenario( use examples from the casestudy above to validate your conclusion), and b) Then use the five forcesframework to analyze the industry.
|
|
Estimate demand again for years
: Estimate demand again for years 4 to 12 with a 3-year weighted moving average in which registrations in the most recent year are given a weight of 2, and registrations in the other 2 years are each given a weight of 1
|
|
How parallelism affects the computer system performance
: How parallelism affects computer system performance. Various advantages and disadvantages of this technology. Relate the performance of parallelism with modern processors like Pentium 4/G4e, multicore processor, etc.
|
|
Supplements for weight loss and hormone replacement
: Provide 10 brief bullet points on Anatomy, Physiology and Pathology of the Endocrine system. Connect how hormonal imbalance can affect weight loss. Provide Nutritional tips for the patient to follow, minimum of 5. Provide guidance on taking supple..
|
|
After-tax operating income-capital expenditures
: You are trying to value Zombie Games Inc,, a company that manufactures games for the major game systems. The firm generated $ 30 million as operating profit (EBIT) in the most recent year and the corporate tax rate is 40%. Assuming that the after-tax..
|
|
Consolidating down to a single vendor
: Acme's primary raw material is PVC sheet that is produced by three major vendors within the United States. Acme, a small consumer products manufacturer, is consolidating down to a single vendor. Continued growth by this vendor assures Acme that it..
|
|
Design documentation for a proposed application project
: Your assignment is to create initial design documentation for a proposed final application project. Your final project for this class will require building a complete application of your choosing and design in Visual Studio.
|
|
Bond with semiannual payments and a yield to maturity
: Wine and Roses, Inc. offers a 5.0 percent coupon bond with semiannual payments and a yield to maturity of 5.63 percent. The bonds mature in 5 years. What is the market price of a $1,000 face value bond? Todd is able to pay $270 a month for 4 years fo..
|
|
Develop a moving average to forecast registrations
: Data collected on the yearly registrations for a Six Sigma seminar at the Quality College are shown in the following table: Develop a 3-year moving average to forecast registrations from year 4 to year 12
|