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Show calculations for abc value of operations

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ABC Corp was created from the combination of two smaller companies two years ago. Selected information is as follows, in millions except percentages:

FCF current year: $215

WACC: 8.5%

Constant growth rate: 3%

Short-term investments: $18

Debt: $47

Preferred stock: $10

Number of common stock shares: 12

Question A. Show calculations for ABC's value of operations.

Question B. Show calculations for ABC's estimated intrinsic stock price.

Question C. Which would have the larger effect on your answer in B, a $10 increase in FCF or a 1% decrease in WACC? Show calculations.

Reference no: EM132505458

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