Suppose that a firm's current profits are $25 million. Management believes that the firm's profits are likely to grow at an annual rate of 5 percent. Calculate the net present value of the firm's stream of profits at a discount rate of 8 percent.
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- A firm’s current profits are P550,000. These profits are expected to grow indefinitely at a constant annual rate of 5 percent. If the firm’s opportunity cost of funds is 8 percent, determine the value of the firm: a. The instant before it pays out current profits as dividends: b. The instant after it pays out current profits as dividends.Please correct answer and don't use hand ratingWhat profit margin must the firm achieve ?
- A firm's current profits are $700,000. These profits are expected to grow indefinitely at a constant annual rate of 3 percent. If the firm's opportunity cost of funds is 5 percent, determine the value of the firm: Instructions: Enter your responses rounded to two decimal places. a. The instant before it pays out current profits as dividends. million b. The instant after it pays out current profits as dividends. millionThe Bakery Inc. expects sales of $750,000 next year at a 5% pretax profit margin and an average tax rate of 30%. If it chooses to pay out 25% of its earnings as dividends, what is the projected increase in retained earnings?Galehouse Gas Station Inc. expects sales to increase from$1,550,000 to $1750,000 next year. Galehouse believes that net assets ( Assets - Liabilities) will represent 50 mpercent of sales. His firm has an 8 percent return on sales and pays 45 percent of profits out as dividens. A. What effect will this growth have on funds? B. If the dividen payout is only 25 percent, what effect will this growth have on the funds?
- Suppose that Maphisa Plc has the following balance sheet and that sales for the year just ended were $7 million. The firm also has a profit margin of 27 percent, a retention ratio of 20 percent, and expects sales of $8 million next year. If all assets and current liabilities are expected to grow with sales, what additional funds will Maphisa Plc need from external sources to fund the expected growth? Assets Liabilities and EquityJasmine Manufacturing wishes to maintain a sustainable growth rate of 10.25 percent a year, a debt-equity ratio of .46, and a dividend payout ratio of 29.5 percent. The ratio of total assets to sales is constant at 1.29. What profit margin must the firm achieve?XYZ Corp. is anticipating a sustained growth rate of 15% per year. Is it possible for them to achieve this growth rate given the following numbers. Debtequity ratio of 0.40 times Profit margin is 5.3 percent Capital Intensity Ratio is 0,75 times to answer: determine what the dividend payout ratio must be. How do you interpret the result?
- Jasmine Manufacturing wishes to maintain a sustainable growth rate of 9.25 percent a year, a debt-equity ratio of .50, and a dividend payout ratio of 27.5 percent. The ratio of total assets to sales is constant at 1.25. What profit margin must the firm achieve in order to meet its growth rate goal?A firm will earn a taxable net return of $500 million next year. If it took on debt today, it would have to pay creditors\varepsilon(rDebt) = 5% + 10% x wDebt2. Thus, if the firm has 100% debt, the financial markets would demand 15% expected rate of return. Further, assume that the financial markets will lend the firm capital at this overall net cost of 15%, regardless of how the firm is financed. The firm is in the 25% marginal tax bracket. 1. If the firmis fully equity-financed, what is its value? 2. Using APV, if the firm is financed with equal amounts of debt and equity today, what is its value? 3. Using WACC, if the firm is financed with equal amounts of debt and equity today, what is its value? 4. Does this firm have an optimal capital structure? If so, what is its APV and WACC?I need guidance with this financial accounting problem using the right financial principles.