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General Mills (NYSE: GIS) is a large manufacturer and distributor of package consumer food products.




Question;General Mills;(NYSE: GIS) is a large manufacturer and distributor of package consumer food;products. Benoit Gagnon, a buy-side;analyst covering General Mills, has studied the historical growth rates in;sales, earnings, and dividends for GIS, and also has made projections of future;growth rates. Gagnon expects the current;dividend of 1.10 per share to grow at 6 percent for the next two years, and;that the growth rate will decline to 3 percent and remain at that level;thereafter.;The risk-free rate;is 4%, the market risk premium is 6%, and GIS?s beta, assumed to be 0.50.;Required;Compute the value;of one share of GIS stock using Dividends Valuation Approach.;Shady Sunglasses operates retail sunglass;kiosks in shopping malls. Below is information related to the company;(dollar amounts in thousands);2014;2015;2016;2017;2018;2019;Net Cash Flow from Operations;564;628;854;1059;1345;1655;Interest Expense after tax;122;134;148;145;155;148;Decrease (Increase) in Cash Required for;Operations;-75;-54;-48;-32;-61;-48;Net Cash Flow from Investing;-287;-300;-310;-285;-294;-277;Net Cash from Debt Financing;210;204;140;85;-40;-46;Present Value Factors (Re =;8.5%);0.922;0.849;0.783;0.722;0.665;Common Shares Outstanding;in thousands;1,512;Required;1.;Using the above information and assuming that steady-state growth of;FCFE in year 2019 and beyond will be 4%, calculate Shady Sunglasses? current;stock value per share using FCFE valuation model. Remember to adjust the present value for;midyear discounting.;2. Using the above information and;assuming that steady-state growth of FCFF in year 2019 and beyond will be 4%;and WACC = 8.5%, compute Shady Sunglasses? current firm value per share using;FCFF valuation model. Remember to adjust;the present value for midyear discounting.


Paper#43644 | Written in 18-Jul-2015

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