The Blazer Company's EPS last year, EPSo, was $1.50. Blazer expects sales to increase by 15% during the coming year. If Blazer has a degree of operating leverage equal to 1.25 and a degree of financial leverage equal to 3.50, then what is its expected EPS or EPS ₁? Hint: First, find DTL where DTL-DOL X DFL. Note: This is a web appendix 14A topic. O $2.48 O $2.87 O $2.02 O $1.66
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- Suppose a firm has had the following historic sales figures. What would be the forecast for next year's sales using the average approach? You must use the built-in Excel function to answer this question. Input area: Year Sales 2016 2017 2018 es es e $ 1,500,000 $ 1,750,000 $ 1,400,000 2019 $ 2,000,000 2020 $ 1,600,000 Output area: Next year's salesYou are trying to value Lucid Motors using comparables analysis. You believe Lucid Motors should be valued similarly to TSLA and that TSLA is the only reasonable comparison. TSLA is currently trading at 10.7x Enterprise Value/Revenue. Lucid is expected to generate $2.2bn in revenues this year. How mucb should you be willing to value Lucid in terms of enterprise Value (assuming market is correct)? $20.6bn $23.5bn $15.4 bn $21.7 bnA company is thinking in investing in one of two potential new products for sale. The projections are as follows: year Revenue/cost £ (Product S) Revenue/cost £ (Product V) 0 (150,000) outlay (150,000) outlay 1 14000 15000 2 24000 25333 3 44000 52000 4 84000 63333 a) Calculate the IRR for Product V only using 1% and 17% to 2 d.p.b) Outline the advantages and disadvantages of the IRR and payback using appropriate academic sources.
- Please see this empty income statement from Spuds and Suds for FY 2020. Calculate the degree of financial leverage if price per units is 15.00. Please give your answer rounded to two decimal places. Your Answer:Start with the partial model in Ch07 P26 Build a Model.xlsx on the textbook’s Web site. Traver-Dunlap Corporation has a 15% weighted average cost of capital (WACC). Its most recent sales were $980 million, and its total net operating capital is $970 million. The following table shows estimates of the forecasted growth rates, operating profitability ratios, and capital requirement ratios for the next three years. All of these ratios are expected to remain constant after the third year. Use this information to answer the following questions:a. Use the data to forecast sales, net operating profit after taxes (NOPAT), total net operating capital (OpCap), free cash flow (FCF), growth rate in FCF, and return on invested capital (ROIC) for the next 3 years. What is the FCF growth rate for Year 3, and how does it compare with the growth rate in sales? What is the ROIC for Year 3 and how does it compare with the 15% WACC?b. What is the value of operations at Year 3, Vop,3? What is the current…Start with the partial model in Ch07 P26 Build a Model.xlsx on the textbook’s Web site. Traver-Dunlap Corporation has a 15% weighted average cost of capital (WACC). Its most recent sales were $980 million, and its total net operating capital is $970 million. The following table shows estimates of the forecasted growth rates, operating profitability ratios, and capital requirement ratios for the next three years. All of these ratios are expected to remain constant after the third year. Use this information to answer the following questions: Estimated Base Case Data for Traver-Dunlap CorporationForecast Year1 2 3Annual sales growth rate 20% 6% 6%Operating profitability (NOPAT/Sales) 12% 10% 10%Capital requirement (OpCap/Sales) 80% 80% 80%Tax rate 35% 35% 35% Return the growth rates to the original values. Now suppose that the capital requirement ratio can be decreased to 60% for all three years and thereafter. What is the new value of operations? Did it go up or down relative to the…
- 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? A• 25% B• 26.45% C• 33.33% D• 28.38%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? choices: • 33.33% • 26.45% • 25% • 28.38%Start with the partial model in the file Ch07 P25 Build a Model.xlsx on the textbook’s Web site. Selected data for the Derby Corporation are shown here. Use the data to answer the following questions.a. Calculate the estimated horizon value (i.e., the value of operations at the end of the forecast period immediately after the Year-4 free cash flow). Assume growth becomes constant after Year 3.b. Calculate the present value of the horizon value, the present value of the free cash flows, and the estimated Year-0 value of operations. c. Calculate the estimated Year-0 price per share of common equity. INPUTS (In Millions) YearCurrent Projected0 1 2 3 4Free cash flow −$20.0 $20.0 $80.0 $84.0Marketable securities $40Notes payable $100Long-term bonds $300Preferred stock $50WACC 9.00%Number of shares of stock 40
- The CFO of AkH sp. z 0.0. is developing a financial plan for the company for the year 2022. They would like to check if the strategy, planned for year 2022, is financially viable. According to their calculations, the forecasted financial data for the year 2022 is as follows (all data given in thousands and represent the projected changes between the beginning and end of 2022): a. Revenues = 2,000 b. Operating costs (excluding depreciation) = 1,400 c. Depreciation = 100 d. Other operating costs = 100 e. Financial costs = 50 f. Opening receivables balance = 100, final balance = 200 g. Opening inventory balance = 300, final balance = 500 h. Opening account payables balance = 300, final account payables balance = 500 a. Opening cash balance = 200 j. Credit payment = 100 k. Proceeds from new issuance of shares = 100 ax. Investment expenditure = 300 %3D %3D We also know that the company pays a 19% income tax. a. Based on the given information, please develop a cash flow statement and decide…Lipsion Ltd company is thinking about investing in one of two potential new productsfor sale. The projections are as follows: year revenue/ product s revenue/ product v0 (150,000) outlay (150000) outlay1 14000 150002 24000 253333 44000 520004 84000 63333 Calculate NPV of both products (to 1 d.p.) assuming a discount rate of 7%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%