Jackson Inc. is in significant financial trouble. It reported operating losses of $20 million in...
90.2K
Verified Solution
Link Copied!
Question
Finance
Jackson Inc. is in significant financial trouble. It reported operating losses of $20 million in the most recent year on revenues of $ 100 million. The total book value of capital invested in the firm today is $190 million. Cost of capital is 12%. Assuming that the firm will revert back to health in 3 years, you have forecast revenues and after-tax income (numbers are in millions are provided in the table below).
Year 1
Year 2
Year 3
Revenue
150
160
180
Net Income
-15
15
25
Depreciation
15
20
25
Cap. Ex
5
25
40
Free Cash Flow (FCF)
-5
10
10
Estimate the Net Present Value of Free Cash Flows over the first 3 years. This Net Present Value is closest to ____.
Using the Free Cash Flow (FCF) in year 3, and assuming the firm will be able to grow at 2.5% and maintain the cost of capital it had in year 3, estimate the terminal value of the firm at the end of year 3
Jackson Inc. has debt with market value of $70 mln. If there are 20 million shares outstanding, estimate the price per share.
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
