Consider the table given below to answer the following question.Asset valueEarningsNet investmentFree cash flow (FCF)Return on equity (ROE)Asset growth rateEarnings growth ratePresent valueYear14567891011.003.07 3.352.512.742312.65 14.55 16.73 18.74 20.99 23.50 25.62 27.93 30.441.65 1.90 2.18 2.51 2.81 3.04 3.29 3.461.65 1.90 2.18 2.01 2.25 2.52 2.12 2.310.500.56 0.521.180.611.150.15 0.15 0.15 0.15 0.15 0.145 0.14 0.1350.11 0.110.15 0.15 0.15 0.12 0.12 0.12 0.09 0.09 0.09 0.090.15 0.15 0.15 0.12 0.08 0.08 0.05 -0.11 0.090.56Assuming that competition drives down profitability (on existing assets as well as new investment) to 14.5% in year 6, 14% in year 7,13.5% in year 8, and 11% in year 9 and all later years. What is the value of the concatenator business? Assume 14% cost of capital. (Donot round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)million

Present value (PV) is the current value of a future sum of money or stream of cash flows given a…

Asset value Earnings Net investment Free cash flow (FCF) Return on equity (ROE) Asset growth rate Earnings growth rate Year 2 3 4 5 6 7 8 9 10 3.35 2.74 1 11.00 12.65 14.55 16.73 18.74 20.99 23.50 25.62 27.93 30.44 1.65 1.90 2.18 2.51 1.65 1.90 2.18 2.01 0.50 0.15 0.15 0.15 0.15 0.15 0.12 0.15 0.15 0.15 0.61 2.81 3.04 3.29 3.46 3.07 2.25 2.52 2.12 2.51 2.31 0.56 0.52 1.18 1.15 0.56 0.15 0.145 0.14 0.135 0.11 0.12 0.12 0.09 0.09 0.09 0.08 0.08 0.05 -0.11 0.11 0.09 0.12 0.09 0.15 0.15 Assuming that competition drives down profitability (on existing assets as well as new investment) to 14.5% in year 6, 14% in year 7, 13.5% in year 8, and 11% in year 9 and all later years. What is the value of the concatenator business? Assume 14% cost of capital. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

Asset value Earnings Net investment Free cash flow (FCF) Return on equity (ROE) Asset growth rate Earnings growth rate Year 2 3 4 5 6 7 8 9 10 3.35 2.74 1 11.00 12.65 14.55 16.73 18.74 20.99 23.50 25.62 27.93 30.44 1.65 1.90 2.18 2.51 1.65 1.90 2.18 2.01 0.50 0.15 0.15 0.15 0.15 0.15 0.12 0.15 0.15 0.15 0.61 2.81 3.04 3.29 3.46 3.07 2.25 2.52 2.12 2.51 2.31 0.56 0.52 1.18 1.15 0.56 0.15 0.145 0.14 0.135 0.11 0.12 0.12 0.09 0.09 0.09 0.08 0.08 0.05 -0.11 0.11 0.09 0.12 0.09 0.15 0.15 Assuming that competition drives down profitability (on existing assets as well as new investment) to 14.5% in year 6, 14% in year 7, 13.5% in year 8, and 11% in year 9 and all later years. What is the value of the concatenator business? Assume 14% cost of capital. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Prepare of Discounted Cash Flow Valation based on the following assumptions: Discount Rate (After Tax) 22.42% Growth Rate 16.55% Cash Flow Year 1 (20X5) $ 4,094,256 Discounted Earnings/Cash Flow 20X5 20X6 20X7 20X8 20X9 20X10 Terminal Year 20X11 Growth $ 4,094,256 Present Value Factor Present Value Valuation Method Indicated Value Discounted Earnings/Cash Flow Method Group of answer choices $40,145,890 $29,375,866 $27,009,780 $35,001,750
Select the correct answer (explain) In how long does a capital invested at 5% simple annual interest grow 24%? a.4.8 b.5.2 c.6 d.4.6
Two capital assets display the following: E(RA) = 12% σA = 1.5% E(RB) = 15% σB = 1.0% If asset A´s return is 5% below the Capital Market Line (CML), and asset B´s return is 1% below the CML, what is the equation of the CML? a) E(Ri) = 0.1203 − 0.02σi b) E(Ri) = 0.09 + 2σi c) E(Ri) = 0.1227 + 0.02σi d) E(Ri) = 0.15 − 2σi e) E(Ri) = 0.14 + 2σi
To 4-digit accuracy, compute the annual growth of your investment in both IWM and EEM.
Assume the following ratios are constant: Profit margin Total asset turnover 2.5 5.2% Equity multiplier 1.3 Payout ratio 22% What is the sustainable growth rate? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., Answer is complete but not entirely correct. Sustainable growth rate 1.09 %
0 - 5 B 9 = Investment A Į ) A Investment A Investment B Investment C 3 ) Formulas B Investment A Investment B Investment C S 5 Formulas = C Growth Rate (Expected) Year 0 11% $3,000 6% $3,000 4% $3,000 Growth Rate (Expected) Year 0 11% $3,000 Year 1 "Take each value in column C and multiply it by its adjacent growth rate in column B (which is 1 plus the percentage expected growth)." ABSOLUTE CELL REFERENCES Growth Rate (Expected) Year 0 11% $3,000 6% $3,000 4% $3,000 Year 1 #N/A E Year 1 Formulas #N/A #N/A #N/A #N/A #N/A #N/A Year 2 #N/A Year 2 F #N/A #N/A #N/A ▼ ✓ Year 3 #N/A G H RELATIVE CELL REFERENCES Year 3 #N/A #N/A #N/A Year 4 ▼ #N/A Year 5 #N/A #N/A #N/A #N/A Year 5 "Start in column D, then move across allowing the column to change, and multiply the preceding value by its FIXED growth rate in cell $B$13 (which is 1 plus the percentage expected growth) to get the current valu FIXED COLUMN / RELATIVE ROW CELL REFERENCES Year 4 #N/A #N/A #N/A Year 6 ▼ #N/A Year 6 #N/A #N/A #N/A J…
6 Suppose Blooper's financials are as follows: See SPREADSHEET 9.1 Inputs Initial Investment Salvage value Initial revenue Initial expenses Inflation rate Discount rate ok Acct receivable as % of sales Investment as % of expenses Tax rate 150 Spreadsheet Name Investment 20 Salvage 150 Initial revenue 100 Initial expenses 5.0% 1.1% 1/4 15.0% 21.0% Inflation Discount rate AR Inv_pct Tax rate Calculate Blooper's working capital in each year of its project. Year Working Capital 0 1 23 4 5 6 CO
Consider the return of investment as given in the following table: Year 2016 2017 2018 2019 2020 Amount (RM) 5000 5175 5394.94 5705.15 6047.46
Use the information from this table to find the standard deviation for each asset. State of Economy Probability of State Return on Asset J Return on Asset K Boom 30% 5% 24% Growth 40% 5% 12% Stagnant 20% 5% 4% Recession 10% 5% -10%
Qb 08.
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
Sales 4000000s 2. Net incouae 400000s 3. Dividends 240000 4 Debt 400000s 5- Total equity 800000s including 400000S RE 6- Total assets 1400000s Calculate 1- Sustainable Growth rate 2- If the extracted percentage is approved in (1)what is the amount of external financing (the borrower) for the next year. 3- Calculate the growth rate that doesnot require external financing-

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