Each complete question will have two parts: 1) a Word document in which the questions are answered and conclusions are explained. And 2) an Excel document which contains the calculations and financial models.
1. Company Q is a publicly-traded company. You forecasted its Enterprise Value to be $3,450 million. The company as 245 million shares outstanding. Would purchasing Company Q’s stock at $15.32 per share be a good investment? Why or why not. If not, then under what circumstances would it be a good investment?
2. Given the following, what would you estimate the EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) value in 2019 for this firm to be? Explain your approach to arriving at this answer.
2016 2017 2018
Revenue 1,250.0 1,281.3 1,306.9
COGS 900.0 928.9 944.9
Depreciation 123.0 145.0 155.0
SG&A 177.5 187.1 188.2
R&D 41.3 38.4 40.5
Operating Income 8.3 -18.2 -21.7
3. Calculate the WACC for a publicly-traded company that has:
a. a beta value of 1.29,
b. an effective tax rate of 12.2%, and
c. Company capital distribution: 40% debt, 60% equity
Use the data from the 9/10/18 value of the Wall Street Journal (below) to calculate your answer. Show your work in the submitted Excel Workbook.
4. A company’s history of WACC and ROIC is as shown below. What can you say about that firm?
