Estimate the free cash flow to the firm in 2013

Assignment Help Business Management
Reference no: EM132667739

Silverline Inc. reported net income of $770 million in 2013 after interest-expenses of $320 million. Its corporate tax rate was 36%. It reported depreciation of $960 million that year, and capital spending (=capital expenditure) was $1,200 million. This firm also had $4,000 million in debt outstanding on the books, rated AA, carrying a yield to maturity of 8%, and trading at par. The beta of the stock was 1.05, and there were 200 million shares outstanding (trading at $60 per share), with a book value of $5,000 million. Silverline's working capital requirements were negligible. The Treasury bond rate was 7%, and the risk premium was 5.5%.

a) Estimate the free cash flow to the firm in 2013.

b) Estimate the value of the firm at the end of 2013 assuming that the long-term growth rate is equal to 6.5%.

c) Based on the FCFF approach used in question b) estimate the value of the equity and the value per share at the end of 2013.

Reference no: EM132667739

Questions Cloud

Concepts of production in the context of parable in matthew : In your Bible, read Matthew 13:3-23.Discuss your understanding of economics in relation to this parable.
Identify a company within the last ten years : Identify a company within the last 10 years that have dropped the ball due to poor accounting quality which negatively impacted investors, profitability.
Explain how a firm is able to deal with both types of costs : You will be evaluating each of the questions as you will need to make sure to use relevant economic terms and content development in your work.
Demonstrate the cost per equivalent unit for materials : Demonstrate the cost per equivalent unit for materials and for conversion that Intense Company will use to assign costs to units of production.
Estimate the free cash flow to the firm in 2013 : Estimate the value of the firm at the end of 2013 assuming that the long-term growth rate is equal to 6.5%.
What is the slope of the budget constraint : Draw Zainab's budget constraint with pies on the horizontal axis and magazines on the vertical axis. What is the slope of the budget constraint?
Demonstrate the labor rate variance for bowie sporting : Bowie Sporting, Demonstrate the labor rate variance and round to the nearest whole dollar. Enter a favorable variance as a negative number.
What is the size of the equal payments : You also agree to make two equal payments 3 and 5 months after the partial payment. What is the size of the equal payments? Use a focal date of 8 months.
Why housing prices rising less rapidly than previously : Why housing prices rising less rapidly than previously? Draw a supply/demand graph to explain your answer.

Reviews

Write a Review

Business Management Questions & Answers

  Leadership business person i admireplease check a business

leadership business person i admireplease check a business person profit or non-profit who you admire and

  Identify the health concerns of children

Questions: Identify the health concerns of children. Discuss health services available to children. Discuss the racial & ethnic disparities in health status. Identify and discuss the challenges faced in rural health and discuss methods that can be..

  Determine the equivalent annual cost of the equipment

Determine the equivalent annual cost of the equipment if the company can now sell it for $194,000. The company's MARR is 20% per year.

  Outline a strategy for amazon to capitalize

Based on a SWOT analysis, outline a strategy for Amazon to capitalize on its strengths and opportunities, and minimize its weaknesses and threats.

  Pc-based unix and linux computers

What version of X Window has been ported to PC-based UNIX and Linux computers?

  Implementation of an integrated delivery system

Determine a key aspect of a health care facility's culture that is necessary to support the implementation of an integrated delivery system. Support your response.

  How has louis vuitton remained competitive over the years

What has been the annual revenues of Louis Vuitton over the past 2 years (2013 & 2014)? How have they measured up to the competition?

  Underlying cause of environmental decline

Social inequality is often said to be the underlying cause of environmental decline. Discuss social inequality's role in at least three of the following process

  Provide brief executive summary state of the business slide

Team Participation to Begin the 1st Practice Round. Your team will need to provide a brief executive summary "state of the business" slide.

  Advanced business logistics

Evaluate the responses of the motor carrier industry following the attack of 9/11. Discuss any long-term effects that are still visible today. An answer must be presented in complete sentences, written in third person and include at least on in te..

  Formal rulemaking and informal rulemaking

Articulate an understanding of how federal agencies enforce their regulations. Compare both formal rulemaking and informal rulemaking.

  Briefly describe each of the performance category

What is MIPS? Briefly describe each of the performance category under MIPS quality payment program

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd