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Business, 18.03.2021 01:50 gaby8282

1. You have been hired as a consultant to develop a valuation model for Terrapins, Inc. Management has provided you with partial income statement and balance sheet. Below is information for the most recent year (2020, year 0) and projected information for 2021. All numbers are in millions. After 2021, the firm is expected to grow at 3% in perpetuity. The weighted average cost of capital (WACC) is 12% and the corporate tax rate is 25%. There are 200 million shares outstanding. a. What is your estimate of 2021 free cash flow? (50) b. What is your estimate of the value of Terrapins, Inc as of January 1, 2021? Assume that 2020 free cash flow has already been distributed. (30) c. What is your estimate of a single share of stock in Terrapins, Inc.? (20)

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