(13-10) Corporate Valuation

The financial statements of Lioi Steel Fabricators are shown belowboth the actual results for 2010 and the projections for 2 a. If operating capital as of 12/31/2010 is $502.2 million, what is the free cash flow for 12/31/2011? b. What is the horizon value as of 12/31/2011? c. What is the value of operations as of 12/31/2010? d. What is the total value of the company as of 12/31/2010? e. What is the intrinsic price per share for 12/31/2010?

The financial statements of Lioi Steel Fabricators are shown belowboth the actual results for 2010 and the projections for 2 a. If operating capital as of 12/31/2010 is $502.2 million, what is the free cash flow for 12/31/2011? Free Cash Flows FCF Acutal 2010 Projected 2011 Net Operating working capital 127.20 134.90 Net Plant & Equipment 375.00 397.50 Net Operating Capital (12/31/12) 502.20 532.40 Investment in Operating Cap. 30.20 NOPAT EBIT*(1-tx rate) 61.50 65.16 Less: Investment in Operating. Capital 30.20 Free Cash Flows FCF = 34.96 b. What is the horizon value as of 12/31/2011? Horizon Value HVt = [FCFt x (1+g)] / (WACC-g) =[ 34.96 x (1+.06)] / (11-6) Horizon Value 741.152 c. What is the value of operations as of 12/31/2010? PV (HVt @WACC + NPVFCF@WACC) PV HVt @WACC 667.70 + NPV FCF@WACC 31.50 Value of Operations as on 12/31/11 = 699.20 d. What is the total value of the company as of 12/31/2010? Vop t + V non operating Assets #NAME? Total Company Value as on 12/31/11 7 = 49.10

e. What is the intrinsic price per share for 12/31/2010? = V firm - V debt - V preference stock V. Debt = N/P + LT Bonds 210.70 V. Preference Stock = 35.00 V. Equity = V[firm-debt-ps] 503.40 PRICE PER SHARE = = V. Equity / Number of Shares Outstanding 50.34

for 2010 and the projections for 2011. Free cash flow is expected to grow at a 6% rate after 2011. The weighted average cost of capital is

for 2010 and the projections for 2011. Free cash flow is expected to grow at a 6% rate after 2011. The weighted average cost of capital is

weighted average cost of capital is 11%.

weighted average cost of capital is 11%.