BUSINESS 3400 You have been hired as a consultant to develop a valuation model for XYZ Inc.
You have been hired as a consultant to develop a valuation model for XYZ Inc. The management of the company has provided you with partial income statement and balance sheet information for the most recent year (2015) as well as on a projected basis for the next four years. All numbers are in millions. Beyond the fourth year, the firm is expected to grow at a constant growth rate of 3%. The weighted average cost of capital is 12% and the market value of debt outstanding is $100 million. The tax rate is 40% and the firm has 10 million shares outstanding.ActualProjected20152016201720182019Net Sales$700.0$850.0$1,000.0$1,100.0$1,155.0Operating Costs (except depreciation)$599.0$734.0$911.0$935.0$982.0Depreciation$28.0$31.0$34.0$36.0$38.0Earning before int. & tax (EBIT)$73.0$85.0$55.0$129.0$135.0Balance Sheet itemsCash$17.0$20.0$22.0$23.0$24.0Accounts receivable$85.0$100.0$110.0$116.0$121.0Inventories$70.0$200.0$220.0$231.0$243.0Net plant and equipment$279.0$310.0$341.0$358.0$376.0Notes payable$100.0$100.0$100.0$100.0$100.0Accounts Payable$16.0$20.0$22.0$23.0$24.0Accruals$44.0$44.0$44.0$44.0$44.0What is the projected Free Cash flow for the year 2017?What is the terminal value (horizon value) in year 2019?What is the estimated price per share for XYZ?
