Reference no: EM131893302
Pick a stock of your choice which you think is likely to be in a high-growth stage and which has publicly-available financial statements for fiscal year 2016. From financial statements, obtain Total Revenue, EBIT, Capital Expenditures, Net Working Capital, Depreciation, and the Debt-to-Equity ratio (use Long-term debt as a measure of total debt) for fiscal year 2016. Make sure the company has positive debt and positive EBIT. The income statement numbers should be for the entire year, not just for the fourth quarter. (Note: possible sources for financial statements include the company’s website, finance.yahoo.com, or the Securities and Exchange Commission (www.sec.gov).)
Assume that the stock will be in a high growth stage over the next 8 years (2017-2024), after which it will reach a stable, lower-growth phase in year 9 (year 2025), which will last into the indefinite future. In addition, assume the following parameters:
The tax rate = 34%.
T-bill rate = 6.5 percent
Market risk premium = 5.5 percent.
High-growth phase:
Expected growth rate in EBIT, Capital Expenditures, Revenues, NWC, and Depreciation: 7.5%.
Equity Beta during the high growth period: 1.34.
Cost of debt = 8.75%
Debt-to-equity stays constant over the high-growth phase.
Stable growth phase:
Expected growth rate in FCFF = 4.5%
Equity Beta during stable growth phase: 1.12
Cost of debt = 7.5%
Debt-to-equity ratio in the stable growth phase will fall to 60% of what it was in the high-growth phase
Capital expenditures are offset by depreciation.
Use the FCFF approach to calculate the enterprise value of the firm, the equity value of the firm, and the intrinsic share value as of the end of 2016.
|
Define criteria for successful business process management
: What are three criteria for successful business process management? How can each process be integrated successfully in the business?
|
|
Explain the codes of conduct
: Thinking of all the accounting ethical theories, codes of conduct, professional, and personal experience, I would like you to draft a 3 paragraph personal.
|
|
Future value of multiple annuities-value of retirement plan
: Future value of multiple annuities. Given an 8 percent interest rate. What is the value of your retirement plan after the 40 years?
|
|
Developing a work breakdown structure
: Think of a somewhat complicated endeavor you are familiar with and develop a work breakdown structure WBS for it.
|
|
FCFF approach to calculate the enterprise value of the firm
: Use the FCFF approach to calculate the enterprise value of the firm, the equity value of the firm, and the intrinsic share value as of the end of 2016.
|
|
What do you think of social networking
: What do you think of social networking? Which social network do you use and why? Give reasons for your choice. On a typical day, how much time do you spend.
|
|
Expected to grow at the firm normal growth rate
: After that, dividends are expected to grow at the firm’s normal growth rate of 6 percent. The firm’s required rate of return is 18 percent.
|
|
What type of project the team focused on
: Think about a team manager you have worked for. , would you label them as an effective or ineffective team leader? Why? Also, be sure to integrate the course.
|
|
What is the present value of fund
: What is the present value of a fund that earns 18% on its balance each year, from which $10,000 must be paid a year for 5 years,
|