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Calculate kogan free cash flow to equity holders

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Reference no: EM132975392

Use the following assumptions to answer the questions below:

  1. Kogan's sales growth for 2019 is the 2019 growth rate you forecast in Q3
  2. The 2020 sales growth is 25% and the sales growth every year after 2020 is 5%.
  3. Asset turnover remains the same as it was in 2018.
  4. Leverage (defined as Assets/Equity) remains the same as it was in 2018
  5. Cost of debt capital is 3%
  6. Cost of equity capital is 9%
  7. There are 100 million ordinary shares on issue

Problem a. Calculate Kogan's Free Cash Flow to Equity holders for 2019, 2020 and 2021

Problem b. Use the Free Cash Flow to Equity method to value the equity in Kogan. State any additional assumptions you feel you need to make.

Reference no: EM132975392

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