What is the value of the firm or assets

Assignment Help Financial Management

Reference no: EM132040154

Use the following information to answer questions 1-7

Consider the following abbreviated financial statements for Boathead Enterprises:

BOATHEAD ENTERPRISES 2014 and 2015 Partial Balance Sheets
Assets					Liabilities and Owners' Equity
		2014		2015			2014		2015
Current assets	$	946	$	1,008	Current liabilities	$	385	$	404
Net fixed assets		3,907		4,600	Long-term debt		2,029		2,197
					Equity		2,439		3,007

BOATHEAD ENTERPRISES 2015 Select IncomeStatement Info
Sales	$	12,340
Costs		5,920
Depreciation		1,050
Interest paid		190

The tax rate is 35%. Long term debt trades at par. The firm has 1,000 shares outstanding. Free Cash Flow to the Firm will grow at 2% and the Free Cash Flow to Equity will grow at 7% forever. The weighted average cost of capital is 12%. The cost of equity is 20%. Construct the income statement. Then answer the following 4 questions.

1) What is the Free Cash Flow to the Firm for 2015?

2) What is the Value of the Firm (Assets)?

3) What is the stock price per share using the discounted FCFF valuation?

4) What is the Free Cash Flow to Equity for 2015?

Reference no: EM132040154

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