Theta Therapeutics Has the Following Information and Projections A) $14,156
B) $15,572
C) $17,129
D) $18,842
E) $20,726

question 20

Multiple Choice

Theta Therapeutics has the following information and projections.Use the FCFE model to calculate the intrinsic value of Theta's equity. $$\begin{array} { l r r r r } &{ \text { Current } } & & \\ & \text { year } & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } \\\text { EBIT (operating profit) } & \text { NA } & \$ 1,000 & \$ 1,100 & \$ 1,200 \\\text { Operating assets } & \$ 1,200 & \$ 1,300 & \$ 1,500 & \$ 1,600 \\\text { Operating liabilities }& \$ 300 & \$ 300 & \$ 400 & \$ 500 \\\text { Total Debt } & \$ 1,000 & \$ 900 & \$ 1,100 & \$ 1,200 \\\text { Tax rate } & \mathrm { NA } & 25 \% & 25 \% & 25 \% \\\text { Interest rate on debt } & \mathrm { NA } & 6 \% & 6 \% & 6 \% \\\text { long-term growth rate } & 4 \% & & &\\\text { Required return on equity }&9\%\end{array}$$

• A) $14,156
• B) $15,572
• C) $17,129
• D) $18,842
• E) $20,726

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