Banoffee Ltd operates a chain of Cafes around the country. You have been providedwith the following projections for the company (in millions of Rupees)EBITNet Cap ExTotal WorkingCapitalCost of EquityPre-tax Cost of Debt1110.00306012%8%2€ 125.0037.5Debt Equity RatioThe company has a tax rate of 20%,The firm will grow at 5% forever, starting in year 4. Theworking capital currently is 48 million.a. Estimate the expected cash flows to the firm for years 1-4.b. Estimate the cost of capital each year for years 1-4.c. Estimate the terminal (Horizon) value.20%7011%7.50%20%3156.2546.58211%7%20%4 (Terminal{Horizon} year)₹172329010%7%20%

Cash flow to the firm refers to the amount of money that is available to all of the capital…

Answered: Banoffee Ltd operates a chain of Cafes…

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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A company plans to take $1000000 bank credit for 11 years while i=40%. After some negotiations, manager of the company convince the bank for i=38%. The decrease in interest rate result in a decrease in total debt. What is the approximate percantage of debt decrease? a. 10% O b. 20% O c. 15% O d. 8%
Assume the following: • A company is importing and selling Mercedes cars. • An Islamic bank invests US$8 million for an 80% profit share. • An investor invests US$2 million for a 20% profit share. • The investor is to be paid a 10% management fee as percentage of profit after expenses. • Sale proceeds = US$12,400,000 Expenses = US$200,000 Calculate the following: 1.1. The total return to the bank: 1.2. The total return to the investor:
i need the answer quickly
6. A machine could be purchased for £800,000; it would be used for 3 years and then sold for £580,000. It would qualify for capital allowances at 18% reducing balance basis with a balancing allowance or charge on disposal. The company pays tax at 20% and has a cost of capital of 10%. What is the present value of the tax cashflow at time 1, to the nearest £100? A £14,700 B £26,200 C £28,800 D £144,000
A Start up data analytics company needs P500,000 for its operations. One bank is willing to lend it money for one year at 12.5% interest per annum (discounted). Another lender is charging 14% with principal and interest payable at the end of the year. A third financier will lend it the amount payable in 12 equal monthly installments of Php 46,00 each. Which offer is best for the business?
A business will have net inflows of € 20 million, € 12 million, € 11 million, € 8 million, and € 5 million. for the next five years. Its current book value is € 30 million. The company has issued 10,000 bonds with an annual interest rate of 3%, with a nominal value of € 1,000 each and maturing in five years. If the market rate is 4%, what is the value of the business, bond and share capital?
A machine could be purchased for £800,000; it would be used for 3 years and then sold for £580,000. It would qualify for capital allowances at 18% reducing balance basis with a balancing allowance or charge on disposal. The company pays tax at 20% and has a cost of capital of 10%. What is the tax cash flow at time 3, to the nearest £100? A £8,400 inflow B £8,400 outflow C £19,365 inflow D £19,365 outflow
Data are as follows: In year 2020, sales are 150,000 units with Selling price per unit of 10 and VC per unit iof 6.50 per unit. Fixed cost is 155,000 and Interest cost is 90,000. Q3. Assume that the company expects to have sales increase by 20%, what will be the resulting change in EBIT in year 2021? • 28.38% • 26.45% • 25% • 33.33%
XYZ Co is thinking about expanding. They have provided the following information: Expect an extra $2.5million in sales 18% of the sales will be uncollectible Collection Costs are 3% on all new sales Production Costs 70% of sales Selling expenses are 11% of sales Opportunity Cost of 22% (before taxes) Turn Receivables 4 times per year Should XYZ Co expand?
Jim's Espresso expects sales to grow by 10.4% next year. Assume that Jim's pays out 85.9% of its net income. Use the following statements LOADING... and the percent of sales method to forecast: a. Stockholders' equity b. Accounts payable The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during your career. Income Statement Sales $205,430Costs Except Depreciation (99,920)EBITDA $105,510Depreciation (6,070)EBIT $99,440Interest Expense (net) (570)Pretax Income $98,870Income Tax (34,605)Net Income $64,265 Balance Sheet Assets Cash and Equivalents $14,920Accounts Receivable 2,010Inventories 3,950Total Current Assets $20,880Property, Plant and Equipment 10,070Total Assets $30,950 Liabilities…
For the year ending December 31, 2017, sales for Company Y were $65.71 billion. Beginning January 1, 2018 Company Y plans to invest 6.5% of their sales amount each year and they expect their sales to increase by 4% each year over the next three years. Company Y invests into an account earning an APR of 1.9% compounded continuously. Assume a continuous income stream. How much money will be in the investment account on December 31, 2020? Round your answer to three decimal places. billion dollars How much money did Company Y invest in the account between January 1, 2018 and December 31, 2020? Round your answer to three decimal places. billion dollars How much interest did Company Y earn on this investment between January 1, 2018 and December 31, 2020? Round your answer to three decimal places. If intermediate values are used, be sure to use the unrounded values to determine the answer. billion dollars Submit Answer

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