Estimate the fcff for the most recent financial year

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Company XYZ reported net income of $770 million after interest expenses of $320 million in a recent financial year. (The corporate tax rate was 36 percent.) It reported depreciation of $960 million in that year, and capital spending was $1.2 billion. The company also had $4 billion in debt outstanding on the books, was rated AA (carrying a yield to maturity of 8%), and was trading at par (up from $3.8 billion at the end of the previous year). The beta of the stock is 1.05, and there were 200 million shares outstanding (trading at $60 per share), with a book value of $5 billion. Company XYZ paid 40% of its earnings as dividends and working capital requirements are negligible. (The Treasury bond rate is 7%)

a. Estimate the FCFF for the most recent financial year.

b. Estimate the value of the company now.

c. Estimate the value of equity and the value per share now.

Reference no: EM13892564

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