Reference no: EM132962702

Questions -

(1) Belgrade Company invests a large sum of money in R&D; as a result, it retains and reinvests all of its earnings. In other words, the company does not pay any dividends and it has no plans to pay dividends in the near future. A major pension fund is interested in purchasing Belgrade's stock. The pension fund manager has estimated Belgrade's free cash flows for the next four years as follows : P3 million, P6 million, P10 million, and P15 million. After the 4th year, free cash flow is projected to grow at a constant rate of 7%. Belgrade's WACC is 12%. The market value of its debt and preferred stock totals PP60 million, and it has 10 million shares of common stock outstanding. What is the present value of the free cash flows projected during the next 4 years?

(2) Finland Company's current stock price is P36; its last dividend was P2.40, and its required rate of return is 12%. If dividends are expected to grow at a constant rate in the future, and if the required rate of return is expected to remain at 12%, what is Finland's expected stock price 5 years from now?

(3) Your broker offers to sell you some shares of Barbados Company common stock that paid a dividend of P2.00 yesterday. Barbados' dividend is expected to grow at 5% for the next 3 years. If you buy the stock, you plan to hold it for 3 years and then sell it. The appropriate discount rate is 12%. What is the dividend per share at the end of 3 years?

(4) Maldives Company's sales in 2019 is P4,615,500. Its operating costs amounted to P3,923,200 while depreciation is P185,100. Property, plant and equipment net at the end of 2019 and 2018 amount to P1,469,300 and P1,360,500, respectively. Net operating working capital at the end of 2019 and 2018 were P1,175,500 and P1,088,400, respectively. Capex in 2019 is the increase in PPE net in 2019 vs 2018, plus Depreciation in 2019. What is the free cash flows in 2019?