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Free cash flow is expected to grow at a 6 percent rate

The financial statements of Lioi Steel Fabricators are shown below, with the actual results for 2004 and the projections for 2005. Free cash flow is expected to grow at a 6 percent rate after 2005. The weighted average cost of capital is 11 percent.

a. If operating capital as of 12/31/2004 is $502.2 million, what is the free cash flow for 12/31/2005?

b. What is the horizon value as of 12/31/2005?

c. What is the value of operations as of 12/31/2004?d. What is the total value of the company as of 12/31/2004?

e. What is the price per share for 12/31/2004?

Income Statement for the Year Ending December 31 (Millions of Dollars Except for Per Share Data)

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Finance Basics: Free cash flow is expected to grow at a 6 percent rate

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Finance Basics: Free cash flow is expected to grow at a 6 percent rate

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