A firm has a net return on equity of 10% over the fiscal year 2019-2020. Over the same year its three closest rivals have returns of 16%, 14% and 9% respectively. Its opportunity cost of capital is equal to: 13 10 16 14
Q: Suppose a firm has had the following historic sales figures. Year: 2016 2017 2018 2019 2020…
A: $2,215,000Explanation:The Exponential Triple Smoothing (ETS) method is used by the FORECAST.ETS…
Q: Phosfranc Inc. is valuing the equity of a company using the free cash flow from equity, FCFE,…
A: Free cash flows for equity(FCFE) is the cash flows available for equity. We need to use the FCFE…
Q: Given the following information, if the firm wants to grow sales by 70% next year, and it is…
A:
Q: The value of a firm is estimated to be $10 million. Next year’s cash flow is expected to be $1…
A: The formula used is shown:
Q: 3. A Company has a 2020 Net Income of 80,000, a 2020 Equity of 60,000, and a 2019 Equity of 75,000.…
A: Return on Investment is computed by dividing the net profit by average equity. Average equity is…
Q: Alpha Inc.'s beta coefficient is 1.4, the risk-free rate is 10 percent, and the market risk premium…
A:
Q: ABC Corp had sales of $375million in 2023 and you expect sales to grow at a 3% in 2024, 2% in 2025…
A: The Value of firm will be found after determining the sum of the future estimated cash flows using…
Q: Finance A firm's expected free cash flows in year 1, 2, and 3 are $30 million, $35 million,…
A: Horizon Value is also known as terminal value. It can be calculated by following formula:- Terminal…
Q: alculate the average ROCE for each company. Return on Capital Employed 2016 2017 2018 2019…
A: Ratio analysis means where different ratio of various years of years companies has been compared and…
Q: Current and projected free cash flows for Radell Global Operations are shown below. Growth is…
A: Growth rate = (Free cashflow 2016 - free cashflow 2015) / free cashflow 2015 Growth rate =…
Q: Sales for Company Y are $100,000 in 2019 and the net profit margin is 9.0%. The Return on Equity is…
A: Solution:- Net profit margin means the amount of net profit as a percentage of sales. So, net profit…
Q: a) At the end of its financial year 2021, an analyst made the following forecast for Next plc for…
A: Enterprise value is the value of business or firm as a whole including value of debt and equity and…
Q: Assume a firm is planning to raise €15,000,000 capital from the market. The firm has a long-term…
A: Under residual dividends model, dividends is- = Net Income - (target equity ratio* total capital…
Q: A firm projects net income to be RM500,000, intends to pay out RM125,000 in dividends, and had RM2…
A: Here, Net Income is RM500,000 Dividends Paid is RM125,000 Equity is RM2,000,000
Q: Quantitative Problem 1: Assume today is December 31, 2019. Barrington Industries expects that its…
A: According to bartleby guidelines , if multiple questions are asked , then 1st question needs to be…
Q: Assume that a firmʹs earnings are expected to be $11 million next year and that this number is…
A: A ratio that provides information regarding the share price of a company by relating it to the…
Q: A company projects a rate of return of 20% on new projects. Management plans to plow back 20% of all…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: Carbon Corporation has a policy of paying out 70% of its earnings. The growth rate of the company…
A: Here, Dividend Pay-out Ratio is 70% Growth Rate is 7% Other Details are as follows: Debt ratio…
Q: The following is a four-year forecast for Torino Marine. Year Free cash flow ($ millions) a. Fair…
A: The projected worth of an asset in the present market, if it were sold today, is known as fair…
Q: Suppose Buyson Corporation’s projected free cash flow for next year is FCF1 = P150,000, and FCF is…
A: Value of firm refers to the total of all the outstanding securities including the common stock,…
Q: Golden Co., a firm that is not operating at full capacity, balance sheet as of December 31, 2021, is…
A: The question is related external funding needed if there is increase in sales by 20% from the…
Q: A fim has the market price of Rs. 38. A constant expected annual growth rate of 6% and a dividend of…
A: Cost of debt (Rd) = 6.5% Cost of preference shares (Rp) = 10% Cost of retained earnings (Rr) = 14%…
Q: You are analyzing the cost of capital for a firm that is financed with 60 percent equity and 50…
A: The overall cost of capital of a firm is the rate at which the company is willing to pay to its…
Q: A company expects a 20% return on equity invested entirely in new projects. The company's management…
A: Return on equity = 20%Retention ratio =30%Earnings per share = €3Expected return = 12%
Q: If Ford Motor Company's return on equity is 16% and the management retains 60% of earnings for…
A: The Return on Equity (ROE) is given as 16% The retention ratio is 60% (or 0.60)
Q: For the fiscal year 2020, AI Rawabi Company has a net profit of RO 150,000 and a return on capital…
A: The question is based on the concept of Accounting ratios.
Q: National Co. has a constant growth rate of 5%. The company pays out 70% of its earnings. National…
A: An optimal capital structure is an efficient and appropriate mix of debt and equity so that…
Q: JenBritt Incorporated had a free cash flow (FCF) of $84 million in 2019. The firm projects FCF of…
A: The present value is the value of the sum received at time 0 or the current period. It is the value…
Q: Suppose Alcatel-Lucent has an equity cost of capital of 9.2%, market capitalization of $10.95…
A:
Q: Assume today is December 31, 2019. Barrington Industries expects that its 2020 after-tax operating…
A: Computation:
Q: What is the value of the entire CoolTech’s entire company?
A: Free Cash Flow: It is the cash flow generated by the business from the normal operations. It is…
Q: Suppose you makes a $1,000 initial investment today, a $4,000 additional investment at the end of…
A: Money-weighted index is the internal rate of return of the investment made. The IRR is the rate at…
Q: A financial analyst wants to compute a company's weighted average cost of capital (WACC) using the…
A: WACC means weighted average cost of capital .It is computed as follows:-WACC =…
Q: Given the forecast below, estimate the fair market value per share of Kenmore Air's equity at the…
A: Fair Market Value per Shares: In the case of a private company's common stock, the fair market value…
Q: What is the cash cow value and the value of its growth opportunities (NPVGO) if a corporation has…
A: Cash Cow Value (CCV): This represents the value of the firm's existing operations if it never takes…
Q: Find the profitability index (PI) for the following series of future cash flows, assuming the…
A: To calculate the profitability index (PI), we need to divide the present value of the future cash…
Q: is composed of the following sources and current market value proportions: Source of Capital…
A: Weighted average cost of capital is the weighted cost of equity , weighted cost of debt and weighted…
Q: GlobalShippers Inc. has forecasted earnings of $1,233,600, $1,345,900, and $1,455,650 for the next…
A: Future value is that amount which includes the opportunity cost of capital. If we will multiply the…
Q: 1. Forecast Free Cash Flows for 2023, 2024 and 2025. 2. Calculate the present value of Forecast Free…
A: The formula to determine the Free Cash Flow is as below: FCF = Cash flow from operations - Cash…
Q: Find the profitability index (PI) for the following series of future cash flows, assuming the…
A: The profitability index is a financial metric used to determine the potential profitability of an…
Q: Free Cash Inc. is expected to have free cash flow to equity next year (FCFE1) equal to $9 million as…
A: Value of debt = Value of firm - Value of equity Value of equity = FCFE1/(cost of equity - growth…
Q: JenBritt Incorporated had a free cash flow (FCF) of $80 million in 2019. The firm projects FCF of…
A:
Q: Reconsider Examples 11.7 and 11.8. The marginal income-tax rate (tm) for Capstone is expected to…
A: A firm's Weighted Average Cost of Capital(WACC) represents the cost of capital across all the…
Q: JenBritt Incorporated had a free cash flow (FCF) of $76 million in 2019. The firm projects FCF of…
A: When will calculating the value of operation we will be considering the total growth rate and the…
Q: Consider a company that has the following financial information for 2022: net income $492,000;…
A: Net income = $492,000Dividend payout = $223,000Common equity = $4,460,000Retained earnings =…
Q: a. What is the horizon value of the unlevered operations? b. What is the total value of unlevered…
A: Excel Spreadsheet: Excel Workings:
Q: nnual report of 2019 which shows an EBITDA of P5,000,000 and a total liability of P15,550,000.…
A: Corporate valuation is a process of evaluating the worth of a company entity in the realm of…
Q: Suppose a company’s most recent free cash flow (i.e., FCF0) was $100 million and is expected to grow…
A: FCF0 = $100 million Growth rate (g) = 5% WACC (r) = 15%
Q: What is the weighted average cost of capital for a corporation that finances an expansion project…
A: Hi, there, Thanks for posting the question. As per our Q&A honour code, we must answer the…
A firm has a net return on equity of 10% over the fiscal year 2019-2020. Over the same year its three closest rivals have returns of 16%, 14% and 9% respectively. Its opportunity cost of capital is equal to:
13
10
16
14
Step by step
Solved in 2 steps
- 13. Using Percentage of Sales. The 2019 financial statements for Growth Industries are presented below. Sales and costs are projected to grow at 20% a year for at least the next 4 years. Both current assets and accounts payable are projected to rise in proportion to sales. The firm is currently operating at full capacity, so it plans to increase fixed assets in proportion to sales. Interest expense will equal 10% of long-term debt outstanding at the start of the year. The firm will maintain a dividend payout ratio of 40. Construct a spreadsheet model for Growth Industries similar to the one in Spreadsheet 18.1. (LO18-2) INCOME STATEMENT, 2019 Sales $200,000 Costs 150,000 $ 50,000 EBIT Interest expense 10,000 Taxable income $ 40,000 Taxes (at 21%) 8,400 Net income $ 31,600 $12,640 $18,960 Dividends Addition to retained earnings BALANCE SHEET, YEAR-END, 2019 Assets Liabilities Current assets Current liabilities $ 3,000 $ 10,000 $ 10,000 Cash Accounts payable Accounts receivable 8,000…Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using the average approach? Year 2017 2018 Sales $ 750,000 500,000 Multiple Choice O $695,000 $700,000 $750,000 $775.000 2019 $ 700,000 2020 $ 750,000 2021 $ 775,000Company IC2S is expected to earn £1250 and £1530 before interest and taxes in year 2021 and 2022. The market expects these earnings to grow at a rate of 2.8% per year after 2022. The firm will make no net investments in long-term capital (i.e., capital expenditures will equal depreciation of long-term assets) nor changes to net working capital. It has debt of £3250 at the end of 2020 with before-tax cost of debt of 3.5%. The debt for the next two years is expected to be £3300 and £3392.40. It then grows by 2.8% to keep a constant ratio of debt to equity every year. Assume that the corporate tax rate equals 22.5%. Suppose the risk-free rate equals 1.7%, and the expected return on the market equals 7.1%. The asset beta for this industry is 1.30. Estimate the unlevered cost of equity capital assuming the firm’s asset beta equals its industry beta. Estimate the firm level free cash flows at the end of 2021-2023. If IC2S were an all-equity (unlevered) firm, estimate its market value at…
- 10 Alawad Company’s capital employed on 1-1 2020 was OMR 150,000 and the profits for the last five years were as follows: Year 2015 OMR 10,000, Year 2016 OMR 20,000, Year 2017 OMR 10,000, Year 2018 OMR 25,000 and Year 2019 OMR 15,000. Calculate Super profit given that the normal rate of return is 5%. a. OMR 7,500 b. OMR 8,500 c. None of the options are correct d. OMR 16,000Rachel the chief financial officer of sunrise fruit snakcs, needed to determine the compnays projected cost of capital for next year, to do so , wshe needed to know the following infomraiont expect a) the proejcted equity level for next year b) the projected intereset rate on next years debt The projected debt level for next year D0 the projected cash balance for next yearAssume today is 15 Jan 2020. You t e the following information regarding Salalah Ceramics 31 Dec 2019 31 Dec 2020 31 Dec 2021 31 Dec 2022 Cash Flow from 12000 Operations Cash Investment 7600 Cash flow from operations will grow by 10% every year up to 2022 and cash investment will grow by 20% every year up to 2022. FCF growth after 2022 will be 5% and required return is 12%. Assuming net debt is 7000 1. What is the firm's enterprise value 2. What is the firm's value of equity
- 25 - For 2023, Volant Inc. is forecast to have Free Cash Flow to the Firm of $1.7 million and Free Cash Flow to Common Equity of $1.3 million. You forecast Free Cash Flow to the Firm to grow at a constant rate of 3.50% while Free Cash Flow to Common Equity grows at 4.00%. Volant’s tax rate is forecast to be 25%. You also collect the data shown below. Book Value Market Value Debt $14.5 million $15.0 million YTM: 4.24% Common Equity $21.0 million $45.0 million Rate of Return: 7.00% Calculate Volant’s Weighted Average Cost of Capital and round to 1 basis point. WACC:JenBritt Incorporated had a free cash flow (FCF) of $72 million in 2019. The firm projects FCF of $205 million in 2020 and $480 million in 2021. FCF is expected to grow at a constant rate of 5% in 2022 and thereafter. The weighted average cost of capital is 10%. What is the current (i.e., beginning of 2020) value of operations? Do not round intermediate calculations. Enter your answer in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answer to two decimal places.Your firm has an ROE of 12.1%, a payout ratio of 27%, $594,200 of stockholders' equity, and $386,100 of debt. If you grow at your sustainable growth rate this year, how much additional debt will you need to issue?
- Suppose Alcatel-Lucent has an equity cost of capital of 10%, market capitalization of $10.8 billion, and an enterprise value of $14.4 billion. Suppose Alcatel-Lucent’s debt cost of capital is 6.1% and its marginal tax rate is 35%. The cash flow for the project is as follows, same as was given in the previous question. Year 0 1 2 3 FCF -100 50 100 Calculate FCFE for each year but only answer: What is the Percentage change in FCFE in Year 2 from Year 1? Please give your answer in Percentage up to 2 places of Decimal without giving the % sign.Quantitative Problem 1: Assume today is December 31, 2019. Barrington Industries expects that its 2020 after-tax operating income [EBIT(1 – T)] will be $430 million and its 2020 depreciation expense will be $65 million. Barrington's 2020 gross capital expenditures are expected to be $110 million and the change in its net operating working capital for 2020 will be $30 million. The firm's free cash flow is expected to grow at a constant rate of 4.5% annually. Assume that its free cash flow occurs at the end of each year. The firm's weighted average cost of capital is 8.1%; the market value of the company's debt is $2.95 billion; and the company has 170 million shares of common stock outstanding. The firm has no preferred stock on its balance sheet and has no plans to use it for future capital budgeting projects. Also, the firm has zero non-operating assets. Using the corporate valuation model, what should be the company's stock price today (December 31, 2019)? Do not round intermediate…Suppose today is January 1, 2022. You wish to value the shares of Terrapin Industries, a private firm with 100 million outstanding shares, $300M in debt, and $25M in excess cash. The company has a tax rate of 30%. You expect the company’s Sales to equal $300 million in 2022, and to grow at 10% per year through 2025. The company’s EBIT margin (i.e., EBIT as a % of sales) is expected to be 10%, while Net Working Capital is expected to equal 20% of (same year) sales. The balance sheet amount of Net Working Capital at the end of 2021 was $55 million. You expect that the company’s Net PP&E will remain constant from now through 2025 (i.e., capital expenditures will equal depreciation each year). After 2025, free cash flows are projected to grow at a constant 2% rate forever. You expect Terrapin to maintain a 50% D/V ratio in the future. Given this, you have estimated the beta of Terrapin’s equity (Be) at 1.1 and the beta of its debt (Bd) at 0.3. The current long-term risk-free rate is…