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MCS,MBA(IT), Pursuing PHD
Devry University
Sep-2004 - Aug-2010
Assistant Financial Analyst
NatSteel Holdings Pte Ltd
Aug-2007 - Jul-2017
NONCONSTANT GROWTH AND CORPORATE VALUATION Rework problem 9-18, parts a, b, and c, using a spreadsheet model. For part b, calculate the price, dividend yield, and capital gains yield as called for in the problem. After completing parts a through c, answer the following additional question, using the spreadsheet model. d. TTC recently introduced a new line of products that has been wildly successful. On the basis of this success and anticipated future success, the following free cash flows were projected: Year 321 5 6 7 8 9 FCF 4 10 $5.5 $12.1 $23.8 $44.1 $69.0 $88.8 $107.5 $128.9 $147.1 $161.3 After the tenth year, TTC’s financial planners anticipate that its free cash flow will grow at a constant rate of 6%. Also, the firm concluded that the new product caused the WACC to fall to 9%. The market value of TTC’s debt is $1,200 million; it uses no preferred stock; and there are 20 million shares of common stock outstanding. Use the corporate valuation model to value the stock.
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Brigham, Eugene F.; Houston, Joel F.. Fundamentals of Financial Management (Finance Titles in the Brigham Family) (Page 331). South-Western College Pub. Kindle Edition.Â
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