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Blitz Industries has 10 million outstanding shares of common stock, $150 million in debt, $30 million in excess cash, and the following financial forecast for the next four years (all figures in millions of US$):

Year 1: EBIT=49.98; Capital Expenditures=11.76; Increase in NWC=7.56; Depreciation=8.82

Year 2: EBIT=54.98; Capital Expenditures=12.94; Increase in NWC=7.06; Depreciation=9.7

Year 3: EBIT=53.98; Capital Expenditures=13.97; Increase in NWC=6.21; Depreciation=10.48

Year 4: EBIT=62.94; Capital Expenditures=14.81; Increase in NWC=5.03 Depreciation=11.11

The tax rate is 40%. Calculate all necessary free cash flows (FCFs) based on the information given. Assume that Blitz’s free cash flows are expected to grow at a 5% rate forever beyond year 4. If Blitz’s weighted average cost of capital is 10%, what is the value of Blitz’s stock per share based on this information?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92257040

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