Apollo Electronics Inc. is an all-equity business with 120 million shares outstanding, trading at $25 per share. The management believes that interest rates are unusually low and decides to undertake a dividend recapitalization. The company plans to raise $1.5 billion in debt and repurchase 60 million shares. What is the market value of the firm before the recapitalization?
Q: Watts Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing…
A: Concept of Predetermined Overhead Rate (POHR)The predetermined overhead rate (POHR) is an estimated…
Q: Can you help me with accounting questions
A: Step 1: Definition of Total Asset Turnover RatioThe total asset turnover ratio measures how…
Q: If the current market price for selling a product at Andrew Materials is $15.50 per unit, and the…
A: Step 1: Determine the profit margin in decimal formStep 2: Calculate the target profit per unitStep…
Q: Calculate pankaj's net income for the year
A: Explanation of Owner's Equity:Owner's equity represents the residual interest in a business after…
Q: Vihat Tech is considering a project that will produce incremental annual sales of $250,000 and…
A: To determine the operating cash flow (OCF) using the top-down approach, we need to follow a…
Q: What was the net income for the year of this general accounting question?
A: Step 1: Define Net IncomeNet Income is the final profit a company earns after deducting all…
Q: True answer?
A: Image.Explanation.The debt-equity ratio is a key financial metric that measures a company's…
Q: ?!
A: Concept of Standard Direct Labor HoursStandard direct labor hours refer to the pre-determined amount…
Q: Provide correct answer financial accounting questions
A: Step 1: Define Total Manufacturing CostsTotal manufacturing costs represent the sum of all costs…
Q: Solve this financial accounting problem
A: Explanation of Contribution Margin:The contribution margin is the portion of sales revenue remaining…
Q: Using miles as the activity level
A: Concept of Mixed CostsMixed costs are expenses that contain both a fixed component and a variable…
Q: General accounting
A: Step 1: Definition of Debt to Asset RatioThe debt-to-assets ratio is a solvency ratio that…
Q: Calculate the predetermined overhead rate based on direct labor hours
A: Explanation of Direct Labor Hours: Direct labor hours represent the time spent by workers who are…
Q: Accounting problem
A: Explanation of Cost of Goods Sold (COGS):The Cost of Goods Sold (COGS) represents the direct costs…
Q: How much was the company's ending inventory of this financial accounting question?
A: Step 1: Definition of Ending InventoryEnding Inventory refers to the total value of goods that…
Q: Waiting for your solution general Accounting
A: Step 1: Define Operating Cycle and Cash CycleOperating Cycle is the total time taken by a company to…
Q: Over applied is shown as negative number
A: Explanation of Budgeted Direct Labor Hours:Budgeted direct labor hours refer to the estimated number…
Q: Financial accounting
A: CAPM Formula: R = Rf + β(Rm - Rf)1. Components Explained:- R = Required return (cost of…
Q: Please provide correct solution and accounting question
A: Step 1: Meaning of degree of operating leverageThe degree of operating leverage measures the…
Q: What is the amount incldible in income
A: Divide Daniel's after-tax contributions by the number of anticipated payments: $72,000 / 240 =…
Q: A fixed asset with a cost of dollar 42,200 and accumulated depreciation of dollar 36,500 is sold for…
A: Calculation of Book Value of the AssetBook Value of the Asset = Cost − Accumulated Depreciation…
Q: Compute earnings per share of this financial accounting question
A: Step 1: Define Earnings Per Share (EPS)Earnings Per Share (EPS) is a financial metric used to…
Q: 5 PTS
A: Step 1: Use the Dividend Payout Ratio formulaStep 2: Substitute the given valuesStep 3: Calculate…
Q: How much interest expense is incurred of this financial accounting question?
A: Step 1: Define Interest ExpenseInterest Expense is the cost incurred by a company for borrowing…
Q: Zenth Enterprises had an ending balance in the Accounts Receivable account of $12,000, while the…
A: Explanation of Accounts Receivable: Accounts receivable represents money owed to Zenth Enterprises…
Q: ABC is an all-equity firm that has 44,200 shares of stock outstanding at a market price of $14.70…
A: Step 1: Calculate the Total Market Value of the FirmThe total market value of the firm (equity)…
Q: What is the direct labor price variance for August
A: Step 1: Definition of Direct Labor Price VarianceThe Direct Labor Price Variance measures the…
Q: What is the answer a b c d ? General Accounting
A: Step 1: Analysis of information givenFinal Price = $85Initial Price = $60Dividend = $4Step 2:…
Q: None
A: Concept of Direct MaterialsDirect materials are the raw materials that are directly used in the…
Q: Give me ans
A: The question requires the determination of the sales for the month. Monthly sales refer to the total…
Q: How much of the $48000 should be allocated to each division
A: Concept of Cost AllocationCost allocation is the process of distributing a shared cost across…
Q: What is the total direct materials cost variance?
A: Explanation of Standard Quantity: Standard quantity represents the predetermined amount of materials…
Q: Provide financial accounting question
A: The cost of common stock using the Capital Asset Pricing Model (CAPM) equation is calculated as: re=…
Q: Need answer
A: Detailed explanation:Given:Purchased price of the equipment $ 25000Freight charges $ 1200Useful life…
Q: The balance sheet for simmons corporation reported the following
A: Explanation of Balance Sheet: This is a financial statement that provides a snapshot of a company's…
Q: None
A: Step 1: Net income EBIT = Earnings before interest and taxes Net income = Earnings before interest…
Q: SUBJECT FINANCIAL ACCOUNTING
A: Explanation of Sustainable Growth Rate (SGR):The sustainable growth rate (SGR) is the maximum rate…
Q: general accounting
A: Step 1: Define Recognized GainRecognized gain is the taxable amount resulting from the sale of…
Q: Need help with this general accounting question
A: Step 1: Definition of Equivalent Units for Conversion CostsEquivalent Units for Conversion Costs…
Q: Give me answer general accounting question
A: Step 1: Definition of Operating LeverageOperating leverage measures how a company's fixed costs…
Q: Financial accounting
A: Step 1: Define Dividend YieldInvestors use the dividend yield to assess an investment's income…
Q: At an output level of 19,500 units, you have calculated that the degree of operating leverage is…
A: The question requires the determination of the fixed cost in relation to the degree of operating…
Q: Help
A: To determine the standard time for the job, we use the formula::Given Data:
Q: Right Answer
A: Concept of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)EBITDA is a…
Q: can you please solve this ans
A: To determine the firm's price-earnings (P/E) ratio, we first calculated the book value of equity…
Q: A company’s fixed monthly expenses are $35,000, and its contribution margin ratio is 62%. Assuming…
A: Explanation of Fixed Monthly Expenses: Fixed monthly expenses are costs that remain constant…
Q: What is Sophia's taxable gain on the sale?
A: Step 1: Given Value for Calculation Selling Price = s = $460,000Purchase Price = p = $75,000 IRS…
Q: Need solution
A: Q1: Under-applied or Over-applied OverheadCalculate Applied Overhead: Applied overhead =…
Q: Need help with this financial accounting question
A: Step 1: Definition of Accounts Receivable Collection PeriodThe accounts receivable collection period…
Q: Stockholders equity
A: The question requires the determination of the return on stockholder's equity.Return on equity (ROE)…
Financial Accounting Question
Step by step
Solved in 2 steps
- Bayani Bakerys most recent FCF was 48 million; the FCF is expected to grow at a constant rate of 6%. The firms WACC is 12%, and it has 15 million shares of common stock outstanding. The firm has 30 million in short-term investments, which it plans to liquidate and distribute to common shareholders via a stock repurchase; the firm has no other nonoperating assets. It has 368 million in debt and 60 million in preferred stock. a. What is the value of operations? b. Immediately prior to the repurchase, what is the intrinsic value of equity? c. Immediately prior to the repurchase, what is the intrinsic stock price? d. How many shares will be repurchased? How many shares will remain after the repurchase? e. Immediately after the repurchase, what is the intrinsic value of equity? The intrinsic stock price?A company’s common stock is currently selling at $40 per share. Its most recent dividend was $1.60, and the financial community expects that its dividend will grow at 10% per year in the foreseeable future. What is the company’s equity cost of retained earnings? If the company sells new common stock to finance new projects and most pay $2 per share in flotation costs, what is the cost of equity? Be sure to include your work for all calculations.Sunland Inc.’s common shares currently sell for $35 each. The firm’s management believes that its shares should really sell for $42 each. The firm just paid an annual dividend of $2 per share and management expects those dividends to increase by 5 percent per year forever (and this is common knowledge to the market). - What does management believe is the correct cost of common equity for the firm?
- Covan, Inc. is expected to have the following free cash flow: a. Covan has 8 million shares outstanding, $3 million in excess cash, and it has no debt. If its cost of capital is 11%, what should be its stock price? b. Covan adds its FCF to cash, and has no plans to add debt. If you plan to sell Covan at the beginning of year 2, what is its expected price? c. Assume you bought Covan stock at the beginning of year 1. What is your expected return from holding Covan stock until year 2? a. Covan has 8 million shares outstanding, $3 million in excess cash, and it has no debt. If its cost of capital is 11%, what should be its stock price? The stock price should be $ (Round to the nearest cent.) A b. Covan adds its FCF to cash, and has no plans to add debt. If you plan to sell Covan at the beginning of year 2, what is its expected price? If you plan to sell Covan at the beginning of year 2, its price should be $ (Round to the nearest cont.) c. Assume you bought Covan stock at the beginning of…Dalton Inc. has a return on equity of 10.6 percent and retains 54 percent of its earnings for reinvestment purposes. It recently paid a dividend of $3.25 and the stock is currently selling for $42. a. What is the growth rate for Dalton Inc.? b. What is the expected return for Dalton's stock? c. If you require a 14 percent return, should you invest in the firm?Brightland Inc. has a market value equal to its book value. Currently, thefirm has excess cash of $1,500, other assets of $5,800, and equity valuedat $5,000. The firm has 250 shares of stock outstanding and net income of$500. What will the new earnings per share be if the firm uses 30 percentof its excess cash to complete a stock repurchase?
- Milton Inc. is an all-equity firm and investors expect it to remain an all-equity firm in the future. It has 100 million shares outstanding and is subject to a 40% corporate tax rate. It has no excess cash. The cost of equity is 20%. The firm is expected to generate free cash flows of $100 million per year forever, with the first free cash flow coming exactly one year from now (in December 2020). (a) What is the current stock price of Milton Inc.? Suppose that today, Milton Inc. makes a surprise announcement that it will issue $200 million worth of perpetual debt (i.e., it will maintain a constant debt level of $200 million forever) with coupon rate 8%, which coincides with its cost of debt. Milton will use the proceeds from the issuance of debt to repurchase stocks. Assume that the recapitalization will take place very soon, within a few days. (b) What will be the total value of the firm after the recapitalization described above? (c) What will be the total value of equity (i.e., the…Start - Up Industries is a new firm that has raised $210 million by selling shares of stock. Management plans to earn a 20% rate of return on equity, which is more than the 15% rate of return available on comparable - risk investments. Half of all earnings will be reinvested in the firm. What will be Start - Up's ratio of market value to book value? Note: Do not round intermediate calculations. What will be Start - Up's ratio of market value to book value if the firm can earn only a rate of return of 10% on its investments? Note: Do not round intermediate calculations. Round your answer to 1 decimal place.Covan, Inc. is expected to have the following free cash flow: a. Covan has 7 million shares outstanding, $4 million in excess cash, and it has no debt. If its cost of capital is 12%, what should be its stock price? b. Covan adds its FCF to cash, and has no plans to add debt. If you plan to sell Covan at the beginning of year 2, what is its expected price? c. Assume you bought Covan stock at the beginning of year 1. What is your expected return from holding Covan stock until year 2? a. Covan has 7 million shares outstanding, $4 million in excess cash, and it has no debt. If its cost of capital is 12%, what should be its stock price? The stock price should be $ (Round to the nearest cent.) b. Covan adds its FCF to cash, and has no plans to add debt. If you plan to sell Covan at the beginning of year 2, what is its expected price? If you plan to sell Covan at the beginning of year 2, its price should be $ (Round to the nearest cent.) c. Assume you bought Covan stock at the beginning of…
- Covan, Inc. is expected to have the following free cash flow: a. Covan has 8 million shares outstanding, $2 million in excess cash, and it has no debt. If its cost of capital is 10%, what should be its stock price? Covan reinvests all its FCF and has no plans to add debt or change its cash holdings. If you plan to sell Covan at the beginning of year 2, what is its expected price? c. Assume you bought Covan stock at the beginning of year 1. What is your expected return from holding Covan stock until year 2? a. Covan has 8 million shares outstanding, $2 million in excess cash, and it has no debt. If its cost of capital is 10%, what should be its stock price? The current stock price should be $ (Round to the nearest cent.) Covan reinvests all its FCF and has no plans to add debt or change its cash holdings. If yqu plan to sell Covan at the beginning of year 2, what is its expected price? If you plan to sell Covan at the beginning of year 2, its price should be $ (Round to the nearest…Covan, Inc. is expected to have the following free cash flow: a. Covan has 7 million shares outstanding, $3 million in excess cash, and it has no debt. If its cost of capital is 12%, what should be its stock price? Covan reinvests all its FCF and has no plans to add debt or change its cash holdings. If you plan to sell Covan at the beginning of year 2, what is its expected price? c. Assume you bought Covan stock at the beginning of year 1. What is your expected return from holding Covan stock until year 2? a. Covan has 7 million shares outstanding, $3 million in excess cash, and it has no debt. If its cost of capital is 12%, what should be its stock price? The current stock price should be $ (Round to the nearest cent.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Year 1 2 3 4 FCF ($ million) 12 14 15 16 Grow by 3% per year Print Done - XSolinux, Inc., is a young start-up company and will not pay dividends on its stock for the next 8 years, since the firm needs to plow back its earnings to fuel growth. The company will then pay a $1.76 per share dividend in year 9 and will increase the dividend by 3.7 percent per year thereafter. If investors require 8.9 percent return to invest in this stock, what is its current share price? (Do not include the dollar sign ($), Round your answer to 2 decimal places