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ID: 2715986 • Letter: N

Question

No other info.... I have to solve it....plz help

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Selected company is 3M Company (MMM). Using the facilities of ValuePro (http://www.valuepro.net) for the company that you have selected to study conduct a discounted cash flow valuation. The analysis should explain each variable used in the analysis, why you accepted the given input, or how and why you changed a variable. The analysis should also examine the relevant cash flows, compare the final valuation to the stock’s current price and explain any differences. (Note: Remember to adjust the equity risk premium to between 5% and 6%; also, adjust the growth rate to an appropriate long-term growth rate.)

Intrinsic Stock Value 127.07 Excess Return Period (yrs) 10 Depreciation Rate (% of Rev) 4.31 Revenues ($mil) 30052 Investment Rate (% of Rev) 4.96 Growth Rate (%) 8.84 Working Capital (% of Rev) 20.52 Net Oper. Profit Margin (%) 20.92 Short-Term Assets ($mil) 13855 Tax Rate (%) 28.972 Short-Term Liab ($mil) 6041 Stock Price ($) 156.73 Equity Risk Premium (%) 3 Shares Outstanding (mil) 690.2 Company Beta 0.8925 10-Yr Treasury Yield (%) 5 Value Debt Out. ($mil) 4864 Bond Spread Treasury (%) 1.5 Value Pref. Stock Out. ($mil) 0 Preferred Stock Yield (%) 7.5 Company WACC(%) 9.25

Explanation / Answer

VALUE OF EQUITY=$156.73*690.2 MIL=$1,08,175.046MIL

VALUE OF DEBT=$4,864MIL

TOTAL VALUE OF EQUITY AND DEBT=$1,13,039.046MIL

COMPANY WACC(%)=9.25%=$1,13,039.046MIL*9.25%=$10,456MIL

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