Calculate the amount of fcfe per share for the year 2018

Assignment Help Portfolio Management

Reference no: EM133098479

Question: The following table lists the Income statement and Balance sheet...

The following table lists the Income statement and Balance sheet for First American Furniture Company Income Statement 2017 2018

Balance Sheet 2017 2018

Revenue $516 $630

Current assets $350 $420

Depreciation 30 35

Prop, plant, & Equip. 500 520

Other operating costs 400 480

Total assets $850 $940

Income before taxes 86 115

Current liabilities 130 150 Taxes 30 40

Long-term debt 50 80

Net income 56 75

Total liabilities $180 $230

Dividends 20 26

Shareholders'' equity $490 $480

Earnings per share $0.56 $0.95

Total L and equity $850 $940 Dividend per share $0.20 $0.26

Capital expenditures 45 50 # of Common shares 100 100

You are a financial analyst at RBC.

Using the data above, you want to determine the value of First American Bank''s stock using the Free Cash Flow to Equity (FCFE) model. You believe that the company''s FCFE will grow at 40% for three years and 12% thereafter.

Capital expenditures, depreciation, working capital, and net debt are all expected to increase proportionately with FCFE. The required rate of return on equity is 15%.

Calculate the amount of FCFE per share for the year 2018.

Calculate Projected 2021 terminal value based on constant growth of 12%

Calculate the current value of a share of the stock based on the two-stage FCFE model.

Reference no: EM133098479

Questions Cloud

Understanding of the concept of human resources management : Explain your understanding of the concept of Human Resources management and how it relates to the Management process?

Human resources management concepts : Give an example of haw Human Resources management concepts and techniques can be applied to all managers?

Create the work of art : Use the textbook and/or online sources to locate and capture three works of art.

Calculate the expected rate : Calculate the Expected Rate, Standard Deviation, Variance and Coefficient of variation and decide which of the following company is better for investment

Calculate the amount of fcfe per share for the year 2018 : Calculate the amount of FCFE per share for the year 2018 and Calculate Projected 2021 terminal value based on constant growth of 12%

Explain the types of discretionary employee benefits : Identify and explain the types of discretionary employee benefits and services that currently exist. Make four recommendations for changes to current systems or

Biggest insight around learning and development : 1. What is the biggest insight around learning and development?

What might you say if the response to your advocacy : What might you say if the response to your advocacy was, "We don't have special education students, so this policy is fine as is" - what might you say or what e

Combating the major hr challenges : As an HRM specialist, you need to provide the solutions for combating the major HR challenges which are confronted by the UAE based firms in the new world of w

User Account

All Pages