Expected Revenue Per Store = $44 million Standard Deviation = $10 million Operating Pre tax Margin Minimum = 6% Operating Pre tax Margin Maximum = 12% Expected Pre tax Margin Value = 9% Non Operating Expenses = $1.5 million GDP Growth Rate = 3% Inflation Rate = 2% Revenue Growth Rate = 5% Cost of Capital = 10% Tax Rate = 40% Expexted Base Year After Tax Flows = $1.476 million Risk Adjusted Value Of Store = $11.53 million Simulate Annual Revenue and Pre tax Operating Margins with a normal distribution on a spread sheet. Show the spread sheet oeprstions used for the simulation.

Expected Revenue Per Store = $44 million Standard Deviation = $10 million Operating Pre tax Margin Minimum = 6% Operating Pre tax Margin Maximum = 12% Expected Pre tax Margin Value = 9% Non Operating Expenses = $1.5 million GDP Growth Rate = 3% Inflation Rate = 2% Revenue Growth Rate = 5% Cost of Capital = 10% Tax Rate = 40% Expexted Base Year After Tax Flows = $1.476 million Risk Adjusted Value Of Store = $11.53 million Simulate Annual Revenue and Pre tax Operating Margins with a normal distribution on a spread sheet. Show the spread sheet oeprstions used for the simulation.

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 cutting-edge product of Continental Fan had the following net cash flow series during its first 5- year period on the market. Find all rate of return values between 0% and 100%. Year 0 1 2 3 4 5 The rate of return is %. Net Cash Flow, $ -44,000 33,000 24,000 13,000 -5,000 7,000
Use the table for the question(s) below. FCF Forecast ($ million) Year Sales 1 270 12.5% 32.40 Less: Income Tax (37%) (6.48) Less Increase in NWC (12% of Change in Sales) 3,60 Free Cash Flow 22.32 Growth versus Prior Year EBIT (10% of Sales) 0 240 OA. $4.27 OB. $7.47 OC. $12.8 OD. $5.12 2 290 7.4% 34.80 (6.96) 2.40 25.44 ACCE 3 310 6.9% 37.20 (7.44) 2.40 27.36 Banco Industries expect sales to grow at a rapid rate over the next 3 years, but settle to an industry growth rate of 4% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. Banco industries has a weighted average cost of capital of 10%, $30 million in cash, $60 million in debt, and 18 million shares outstanding. If Banco Industries can reduce its operating expenses so that EBIT becomes 12% of sales, by how much will its stock price increase? 4 325.5 5.0% 39.06 (7.81) 1.86 29.388
Incremental earnings: Company will spend 4.5 million on advertising for a new product. Ads will boost sales by 10.1 million first year and 8.1 million 2nd year plus increase other product sales by 2.2 million each year. The new product will have a gross profit margin of 33% and gross profit margin on existing products will increase by 20%. corporate tax rate is 25%. My Excel answer is below. Am I correct? For the TOTAL GROSS PROFIT, I added the gross profit from both the new product and existing product. Normally, I would subtract COGS from Sales It seems here it is given with the %. For TAXES, I multiplied EBIT to the 25%. For INCREMENTAL EARNINGS, I subtracted Taxes from EBIT. Incremental Earnings Forecast (in 000s) 1 2 Sales of new product 10.1 8.1 Sales of other products 2.2 2.2 Gross Profit for new product is 33% 3.33 2.67 Gross Profit for other products is 20% 0.44 0.44 Total Gross Profit 3.8 3.1 Selling, General and Administrative Expense (advertising) 4.5 0.0…
Unlevered Value Richter Manufacturing has a 10% unlevered cost of equity. Richter forecasts the following free cash flows (FCFS), which are expected to grow at a constant 2% rate after Year 3. Year 2 $755 What is the horizon value of the unlevered operations? Do not round intermediate calculations. Round your answer to the nearest dollar. FCF Year 1 $720 $ Year 3 $820 What is the total value of unlevered operations at Year 0? Do not round intermediate calculations. Round your answer to the nearest dollar.
Excel Online Structured Activity: Income and Cash Flow Analysis The Berndt Corporation expects to have sales of $11 million. Costs other than depreciation are expected to be 80% of sales, and depreciation expected to be $1.1 million. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. Brendt's federal-plus-state tax rate is 40%. Berndt has no debt. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. Set up an income statement. What is Berndt's expected net cash flow? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000. Round your answer to the nearest dollar. $ b. Suppose Congress changed the tax laws so that Berndt's depreciation expenses doubled. No changes in operations occurred. What is Berndt's expected net cash flow? Round your answer to the nearest…
For a firm facing a marginal income tax rate of 35%, what is the after-tax cash flow effect of: (a) a $1,900 increase in contribution margin during the year, and (b) a $800 increase in cash operating expenses? (Do not round intermediate calculations.) (a) Effect on after-tax cash flow to contribution margin (b) Effect on after-tax cash flow to cash operating expenses
Forecast Orwell's additional funds needed (AFN) for next year. Assuming the firm is operating at only 50% of capacity and using the data in the table below, forecast Orwell's AFN for the coming year? Current Assets may be considered negligible. Last year's sales = S0 $164,000 Last year's accounts payable $40,000 Sales growth (ΔS) $46,000 Last year's notes payable $10,000 Last year's total assets = A0* $268,000 Last year's accruals $10,000 Last year's profit margin = PM 0.00 Target payout ratio 0.1
A cutting-edge product of Continental Fan had the following net cash flow series during its first 5-year period on the market. Find all rate of return values between 0% and 100%. Year Net Cash Flow, $ 0 -48,000 1 35,000 2 24,000 3 15,000 4 -3,000 5 9,000 The rate of return is %
Given the following information calculate the relevant annual Net Cash Flow After Tax [NCFAT], needed to calculate NPV. Forecast Annual Income $ Cash Revenue 360,000 Less Cash Operating Expenses 160,000 Admin Cash Flow Expenditure 60,000 Depreciation 36,000 Interest 24,000 Net Profit Before Tax Tax @30% 24,000 Net Profit After Tax 56,000

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