Sophia-Principle-Finance-Milestone (49)

Determining PB Ratio for Companies with Different Returns and Growth Assume that the present value of expected ROPI follows a perpetuity with growth g (Value = Amount/ [r - g]). Determine the theoretically correct PB ratio for each of the following companies A and B. Note: NOPAT = NOA » RNOA. Company Net Operating Assets Equity RNOA ROE Weighted Avg. Cost of Capital Growth Rate in ROPI $100 $100 19% 19% 10% 2% $100 $100 12% 12% 10% 4% A B Round answers to two decimal places. PB Ratio Company A Company B

Exercise 2: You are evaluating the investment in two companies whose past ten years' return are shown below: Salalah Mills Oman Mills X2 Year X 1 7 49 4 4 16 81 3 -3 -2 4 36 1 1 5 8 64 25 ΣΧ15 E X? =115 N= ΣΧ-22 Σχ174 Calculate the Average Return and Risk of each company's return? Which of the two companies are more risky and why?

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A firm has decided that its optimal capital structure is 100% equity-financed. It perceives its optimal dividend policy to be a 60% payout ratio. Asset turnover is sales/assets = 0.6, the profit margin is 10%, and the firm has a target growth rate of 3%.   a-1. Calculate the sustainable growth rate. (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) a-2. Is the firm’s target growth rate consistent with its other goals? b. If the firm’s target growth rate is not consistent with its other goals, what would asset turnover need to be to achieve its goals? (Do not round intermediate calculations. Round your answer to 3 decimal places.) c. If the firm’s target growth rate is not consistent with its other goals, how high would the profit margin need to be  to achieve its goals? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)

I'm researching calculating the fair P/E ratio of a company using NOPAT growth, ROIIC (Return on Invested Incremental Capital), and the cost of capital. Here: NOPAT Growth: 10% ROIIC: 20% Cost of Capital: 6.7%                  --------> PE of 32.3 Fair P/E Ratio: 32.3 Cash Flow period: 15 years Please work on the excel or the paper  However, the image provided doesn't detail the exact steps for calculating the fair P/E ratio of 32.3. It outlines the method but omits the step-by-step process. Could you please guide me through the steps to derive this result? You can also use a DCF.

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What are the implications of the change in present value based on risk (a decrease in FCF by 10%)? In other words, what does the change mean to the company, and how would a financial manager interpret it?

You've collected the following information about Groot, Inc.: Profit margin Total asset turnover Total debt ratio Payout ratio = 4.44% = 3.50 = .25 = 29% a. What is the sustainable growth rate for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the ROA? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Sustainable growth rate b. ROA % 15.54 %

You are given the following information for a firm: EBIT x (1-T) this period Depreciation Net Working Capital Increase Asset Beta Capital Expenditures Growth Rate of FCF Risk Free Rate = = $17 million $2.4 million $0 1.1 $3.7 million 9% 3% Market Risk Premium Using the above data, what is the present value of all FCF? Don't forget that in applying the growing perpetuity formula, you have to use not this year's FCF, but next period's FCF (multiply this period's FCF by (1 + growth rate of FCF). 6.3% Your answer should be in $millions. For example, if your answer is $7.34 million, then enter 7.34 in the answer box.

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Give typing answer with explanation and conclusion  A company has an expected EBIT of $18,000 in perpetuity, a tax rate of 35%, and a debt-to- equity ratio of 0.75. The interest rate on the debt is 9.5%. The firm’s WACC is 9%. a) If the company has not debt, what would be the unlevered cost of capital and firm value? b) Suppose now the company has $55,714.29 in outstanding debt. Using your answer to part a) and M&M Proposition I with taxes, what is the value of this levered firm?

Please help solve and show work. eview this situation: Universal Exports Inc. is trying to identify its optimal capital structure. Universal Exports Inc. has gathered the following financial information to help with the analysis. Debt Ratio Equity Ratio rdrd rsrs WACC 30% 70% 6.02% 9.40% 9.71% 40% 60% 6.75% 9.750% 9.55% 50% 50% 7.15% 10.60% 10.02% 60% 40% 7.55% 11.30% 10.78% 70% 30% 8.24% 12.80% 11.45%   Which capital structure shown in the preceding table is Universal Exports Inc.’s optimal capital structure? Debt ratio = 70%; equity ratio = 30%   Debt ratio = 30%; equity ratio = 70%   Debt ratio = 50%; equity ratio = 50%   Debt ratio = 60%; equity ratio = 40%   Debt ratio = 40%; equity ratio = 60%     Consider this case: Globex Corp. currently has a capital structure consisting of 35% debt and 65% equity. However, Globex Corp.’s CFO has suggested that the firm increase its debt ratio to 50%. The current risk-free rate is…

Q11

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