Solution-Change in net working capital

Change in net working capital

Reference no: EM132509931

You are valuing Soda City Inc. It has $110 million of debt, $90 million of cash, and 140 million shares outstanding. You estimate its cost of capital is 12.4%. You forecast that it will generate revenues of $700 million and $800 million over the next two years, after which it will grow at a stable rate in perpetuity. Projected operating profit margin is 20%, and the tax rate is 30%. Each year, deprecation is $4mm and capital expenditures including the change in net working capital are $6mm. The terminal EV/FCFF exit multiple at the end of year 2 is 16. What is your estimate of its share price?

Reference no: EM132509931

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Change in net working capital

Reference no: EM132509931

Reference no: EM132509931

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