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Sora Industries has 70 million outstanding? shares, $ 121 million in? debt, $ 47 million in? cash, and the following projected free cash flow for the next four? years: Year 0 1 2 3 4 Earnings and FCF Forecast? ($ million) 1 Sales 433.0 468.0 516.0 547.0 574.3 2 Growth vs. Prior Year ?8.1% ?10.3% ?6.0% ?5.0% 3 Cost of Goods Sold ?(313.6) ?(345.7) ?(366.5) ?(384.8) 4 Gross Profit 154.4 170.3 180.5 189.5 5 ?Selling, General,? & Admin. ?(93.6) ?(103.2) ?(109.4) ?(114.9) 6 Depreciation ?(7.0) ?(7.5) ?(9.0) ?(9.5) 7 EBIT 53.8 59.6 62.1 65.2 8 ?Less: Income Tax at? 40% ?(21.5) ?(23.8) ?(24.8) ?(26.1) 9 ?Plus: Depreciation 7.0 7.5 9.0 9.5 10 ?Less: Capital Expenditures ?(7.7) ?(10.0) ?(9.9) ?(10.4) 11 ?Less: Increase in NWC ?(6.3) ?(8.6) ?(5.6) ?(4.9) 12 Free Cash Flow 25.3 24.6 30.8 33.3 a. Suppose? Sora's revenue and free cash flow are expected to grow at a 3.5 % rate beyond year four. If? Sora's weighted average cost of capital is 9.0 % ?, what is the value of Sora stock based on this? information? b.? Sora's cost of goods sold was assumed to be? 67% of sales. If its cost of goods sold is actually? 70% of? sales, how would the estimate of the? stock's value? change? c. Return to the assumptions of part ?(a?) and suppose Sora can maintain its cost of goods sold at? 67% of sales.? However, the firm reduces its? selling, general, and administrative expenses from? 20% of sales to? 16% of sales. What stock price would you estimate? now? (Assume no other? expenses, except? taxes, are? affected.) d.? Sora's net working capital needs were estimated to be? 18% of sales? (their current level in year? zero). If Sora can reduce this requirement to? 12% of sales starting in year? 1, but all other assumptions are as in ?(a?), what stock price do you estimate for? Sora? ?(Hint?: This change will have the largest impact on? Sora's free cash flow in year? 1.)
find the uniform equivalent amount, A, at the end of each of the eight six-month periods if the nominal interest rate is 20% compounded semiannually.
Royal Mediterranean Cruise Line's common stock is selling for $22 per share. The last dividend was $1.20, and the dividends are expected to grow at a 5% annual rate. Flotation costs on new stock sales are 7% of the selling price. What is the cost of ..
Denote the fitted volatility by gmvol. - Build an adequate GARCH model plus gmvol as the exogenous variable for the log S&P return series.
What is the minimum investment yield the company requires to earn a 4% profit?
For Treasuries, there is only one spot yield curve that tells you rates for all possible maturities of Treasury loans starting today. How many Forward curves can you have today? One or more? Why?
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Adcock Company issued $410,000, 9%, 20-year bonds on January 1, 2017, at 101. Interest is payable annually on January 1. Adcock uses straight-line amortization for bond premium or discount. Prepare the journal entry to record the issuance of the bond..
A few years ago, Spider Web, Inc. issued bonds with a 6.49 percent annual coupon rate, paid semiannually. The bonds have a par value of $1,000, a current price of $1,020, and will mature in 13 years. What would the annual yield to maturity be on the ..
Afterward, the company pledges to maintain a constant 6 percent growth rate in dividends forever.
A company just paid an annual dividend of $0.82 per share, and this dividend is expected to remain constant in the future. What is one share worth today if you require a 12% rate of return on investments of this risk?
Cheeseburger and Taco Company purchases 17,653 boxes of cheese each year. What is the annual ordering cost of cheese inventory?
Bridget Morrow is a sophomore at a state college and is running out of money. Wanting to continue her education, Bridget is considering a student loan. Explain her options. How can she best to minimize her Byron cost and maximize her flexibility?
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