24. You find an analyst report that was left ni a train. You read that the analyst used the discounted free cashflow model to value a company called PROMISE. The analyst found that the present value of PROMISES' freecash flows of the next five years and the present value of PROMISES' terminal enterprise value jointly sum upto $600 milion. The analyst also found that PROMISES' cash position si 100 milion. The analyst came up withavalue of $120 per share of PROMISE stock. The company has 5milion shares outstanding. Given thisinformation, how much debt does PROMISE have according to this analyst?5012014010

Step-by-Step Calculation: 1. Given Information: Present value of PROMISE's free cash flows and…

Answered: 24. You find an analyst report that was…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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mekmek Corporation uses the Baumol Cash Model to determine its optimal cash balance. For the coming year, the expected cash disbursement total to P432,000. The interest rate on marketable securities is P8 per transaction. Using 5% carrying cost rate, what is the optimal cash balance of the company? A. 1,175.76 B. 5,878.78 C. 11,757.55 D. 142,000
1. Makmak Corporation uses the Baumol Cash Management Model to determine its optimal cash balance. For the coming year, the expected cash disbursement total P432,000. The interest rate on marketable securities is 5% and P8 is the cost per transaction. What is the optimal Cash Balance of the company? 2. If Hot Tubs Inc. had annual credit sales of P2,027,773 and its days sales outstanding was equal to 35 days, what was its average A/R outstanding? (Use a 365-day year.)
You will apply the concepts of company valuation that you have just learned to determine whether company XYZ is overvalued. We are currently at the end of the year "t". You performed a thorough financial analysis of XYZ and forecast the following Free Cash Flows (FCF): Year t+1: 352 million USDYear t+2: 385 million USDYear t+3: 407 million USDFrom year t+3 onward, you expect the FCFs to grow at a constant yearly rate of 4%. Through your analysis, you also determined that the appropriate Weighted Average Cost of Capital (WACC) for XYZ was 11%. Finally, you know that XYZ has 1000 million USD in debt and 100 million shares outstanding.
in this assignment, you will apply the concepts of company valuation that you have just learned to determine whether company XYZ is overvalued. We are currently at the end of year "t". You performed a thorough financial analysis of XYZ and forecast the following Free Cash Flows (FCF): Year t+1: 352 million USDYear t+2: 385 million USDYear t+3: 407 million USDFrom year t+3 onward, you expect the FCFs to grow at a constant yearly rate of 4%. Through your analysis, you also determined that the appropriate Weighted Average Cost of Capital (WACC) for XYZ was 11%. Finally, you know that XYZ has 1000 million USD in debt and 100 million shares outstanding.
A financial analyst draws a cash flow diagram to model the following scenario. A 90-day commercial bill will mature for $200000. The price paid for the bill at issue was $196041.05. The bill was sold 19 days after issue for $196735.95. Calculate the annual rate of simple interest (as a percentage, to two decimal places) earned by the buyer who paid $196041.05 and sold for $196735.95. What was the annual rate of simple discount (as a percentage, to two decimal places) that the buyer sold at (earning a price of $196735.95)? Here is the cash flow diagram the analyst drew. Investor X S W N Which response best reflects the values of Z, Y, X, W, V, U, T and S? O a. Z is 90.00, Y is $200000.00, X is $196041.05, W is 19, V is $196735.95, U is not required, T is 8.29% p.a. (simple discount) and S is 6.91% p.a. (simple interest). O b. Z is 90.00, Y is $200000.00, X is $196041.05, W is 19, V is $196735.95, U is not required, T is 8.39% p.a. (simple discount) and S is 6.81% p.a. (simple interest).…
3. A finance company has an opportunity to purchase three promissory notes from a broker for a total of $140,000 cash. The first note would pay $20,000 in one year, the second would pay S$70,000 in two years and the third $80,000 in three years. The finance company has set for itself a minimum acceptable rate of return of 10% effective. a. Evaluate the net present value of the investment at the company's MARR. b. State your conclusion about the acceptability of the profitability of this deal.
Your company seeks to take over Good Deal Company. Your company’s offer for Good Deal is $3,000,000 in cash upon signing the agreement followed by 10 annual payments of $300,000 starting one year later. The time value of money is 10%. Find the present worth of your company’s offer and perform a sensitivity analysis with a graph in excel i.e. find how sensitive the value of the present worth is to changes in the initial cash upon signing, amount of payments, their frequency and rate of return.
Home Security Systems is analyzing the purchase of manufacturing equipment that will cost $56,000. The annual cash inflows for the next three years will be: Year 1 2 3 Cash Flow $ 28,000 26,000 21,000 Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the financial calculator method. a. Determine the internal rate of return. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Internal rate of return %
Choose the correct answer with solution. Pls choose only the answer in the choices. Q1. How much is the net cash flow of Gising Company in Year 1?a. 390,000b. 290,000c. 220,000d. 140,000Q2. How much is the terminal value recognized after the three-year forecast period?a. 10,880,000b. 12,466,667c. 13,090,000d. 10,880,000Q3. What is the net Cash flow to the Firm?a. 11,140,489b. 12,103,272c. 12,808,412d. 13,974,000Q4. What is the net cash flow to equity?a. 10,140,489b. 11,103, 272c. 11, 140, 489d. 12, 103, 272
Your consulting firm will produce cash flows of $190,000 this year, and you expect cash flows thereafter to keep pace with any increase in the general level of prices. The interest rate currently is 5.2%, and you anticipate inflation of about 1.2%. a. What is the present value of your firm's cash flows for years 1 through 5? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Present value b. How would your answer to (a) change if you anticipated no growth in cash flow? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Present value
Beyer Company is considering buying an asset for $350,000. It is expected to produce the following net cash flows. Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Period answer to 2 decimal places.)
Home Security Systems is analyzing the purchase of manufacturing equipment that will cost $36,000. The annual cash inflows for the next three years will be: Year 1 2 3 Cash Flow $ 18,000 16,000 11,000 Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the financial calculator method. a. Determine the internal rate of return. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Internal rate of return % b. With a cost of capital of 12 percent, should the equipment be purchased? O Yes O No

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