How much is the intrinsic value of GWAPO Corporation if the required return for this business is 12%? (Use 5 decimal places for Present Value factors) Ms. Ga Ling projected the following data for GWAPO Corporation:(amounts in millions of Pesos)Cash Operating ExpensesYear Revenue50.0030.00255.0033.0060.5036.30466.5539.93573.2143.92The company owns a property originally acquired atP50,000,000 with useful life of 10 years. The terminal value isassumed based on the growth rate of the cash flows. Annualcapital investment required is P2,000,000. Outstanding loans isP16,620,000. Income tax rate is 30%.How much is the intrinsic value of GWAPO Corporation if therequired return for this business is 12%?

we take cash flow after tax before depreciation.

Answered: Ms. Ga Ling projected the following…

Ms. Ga Ling projected the following data for GWAPO Corporation: (amounts in millions of Pesos) Year Revenue Cash Operating Expenses 1 50.00 30.00 2 55.00 33.00 3 60.50 36.30 4 66.55 39.93

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

How much is the intrinsic value of GWAPO Corporation if the required return for this business is 12%? (Use 5 decimal places for Present Value factors)

Ms. Ga Ling projected the following data for GWAPO Corporation:
(amounts in millions of Pesos)
Cash Operating Expenses
Year Revenue
50.00
30.00
2
55.00
33.00
60.50
36.30
4
66.55
39.93
5
73.21
43.92
The company owns a property originally acquired at
P50,000,000 with useful life of 10 years. The terminal value is
assumed based on the growth rate of the cash flows. Annual
capital investment required is P2,000,000. Outstanding loans is
P16,620,000. Income tax rate is 30%.
How much is the intrinsic value of GWAPO Corporation if the
required return for this business is 12%?

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