Company C showed a profit of $1.4 million last year. The CEO of the company expects the profit to decrease by 7% each year over the next five years and the profits will be continuously invested in an account bearing a 4.75% APR compounded continuously. (a) Write the flow rate, R, of the income stream. (Lett represent the number of years after the company showed a profit of $1.4 million) 800- million dollars per year (b) Calculate the 5-year future value. (Round your answer to three decimal places) $ (c) Calculate the 5-year present value. (Round your answer to three decimal places)

Company C showed a profit of $1.4 million last year. The CEO of the company expects the profit to decrease by 7% each year over the next five years and the profits will be continuously invested in an account bearing a 4.75% APR compounded continuously. (a) Write the flow rate, R, of the income stream. (Lett represent the number of years after the company showed a profit of $1.4 million) 800- million dollars per year (b) Calculate the 5-year future value. (Round your answer to three decimal places) $ (c) Calculate the 5-year present value. (Round your answer to three 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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he total revenue numbers over the past 4 years for Tag-It Corporation were as follows (values in millions):73,78569,49575,35671,879Determine whether you think Tag-It can hit the target of a 12% increase in sales next year.
The Optical scam company has forecast a sales growth of 20 percent for next year. The current financial statements are shown below: What is pro forma balance sheet for next year? Sales $ 31,600,000 Costs 26,675,500 Taxable income $ 4,924,500 Taxes 1,723,575 Net income $ 3,200,925 Dividends $ 1,280,370 Addition to retained earnings 1,920,555 Balance Sheet Assets Liabilities and Owners' Equity Current assets $ 7,320,000 Accounts payable $ 5,688,000 Long-term debt 6,636,000 Fixed assets 20,172,000 Common stock $ 1,594,000 Accumulated retained earnings 13,574,000 Total equity $ 15,168,000 Total assets $ 27,492,000 Total liabilities and equity
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Global Corp. expects sales to grow by 7% next year. Using the percent of sales method and the data provided in the given tables LOADING... , forecast: a. Costs except depreciation b. Depreciation c. Net income d. Cash e. Accounts receivable f. Inventory g. Property, plant, and equipment h. Accounts payable (Note: Interest expense will not change with a change in sales. Tax rate is 26%.) 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 Net Sales 185.3Costs Except Depreciation -175.4EBITDA 9.9Depreciation and Amortization -1.2EBIT 8.7Interest Income (expense) -7.7Pretax Income 1Taxes (26%) -0.3Net Income 0.7 Balance Sheet Assets Cash 23.4Accounts…
A company reports the following for the prior year: $1.6 million in sales $1 million in total assets $160,000 in net income $800,000 in equity (at the beginning of this prior year) $ 520,000 in current assets $480,000 in fixed assets $48,000 in accounts payable $32,000 in accrued liabilities The company projects that the sales will grow at 30%. Calculate the AFN for this company assuming 80% retention ratio.
Derry Corporation is expected to have an EBIT of $3,100,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $245,000, $150,000, and $250,000, respectively. All are expected to grow at 15 percent per year for four years. The company currently has $19,500,000 in debt and 860,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.4 percent, indefinitely. The company's WACC is 9.7 percent and the tax rate is 23 percent. What is the price per share of the company's stock? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Share price
You have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $3,850,000 this year. Depreciation, the increase in net working capital, and capital spending were $275,000, $133,000, and $525,000, respectively. You expect that over the next five years, EBIT will grow at 20 percent per year, depreciation and capital spending will grow at 10 per year, and NWC will grow at 15 per year. The company has $22,500,000 in debt and 430,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.3 percent, indefinitely. The company's WACC is 9.35 percent and the tax rate is 21 percent. What is the price per share of the company's stock? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Answer is complete but not entirely correct. Share price S 226.59
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You have been studying Lucas Corp.’s financial statements. This year, the company has an EBIT of $3.15mil, Depreciation of $295,000, an increase in net working capital of $125,000, and a capital spending of $535,000. You expect that over the next 5 years, EBIT will grow at 15% per year, depreciation and capital spending will grow at 20% per year, and NWC will grow at 10% per year. After year 5, you expect the company’s free cash flow will grow at 3.5% indefinitely. The company has a 21% corporate tax rate and a WACC of 8.9%. a) Compute the free cash flows for the next 5 years. b) Compute the terminal value at the end of year 5. c) What is the company’s enterprise value?

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