Homework Help is Here – Start Your Trial Now!
Business
Finance
The price earnings ratios for 4 public companies are: 5.2, 4.6, 3.4, 4.86. The after-tax capitalization  rate is:  a. 16.00%  b. 18.08%  c. 20.19%  d. 22.15%

The price earnings ratios for 4 public companies are: 5.2, 4.6, 3.4, 4.86. The after-tax capitalization  rate is:  a. 16.00%  b. 18.08%  c. 20.19%  d. 22.15%

Essentials Of Investments
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
See similar textbooks
icon
Related questions
Question

The price earnings ratios for 4 public companies are: 5.2, 4.6, 3.4, 4.86. The after-tax capitalization 
rate is: 
a. 16.00% 
b. 18.08% 
c. 20.19% 
d. 22.15%

65. A company has a five year weighted average after tax cash flow of $125,000. It has been determined the discount rate is 19%, short term expected growth is 11%, and long-term sustainable growth is 3%. The analyst has also determined excess cash of $25,000. What is the value of the company based on the capitalization of after tax cash flows? a. $625,000 b. $657,895 c. $781,250 d. $909,090 66. ABC Company has projected the following cash flows: Year 1: 85,000 Year 2: 105,000 Year 3: 109,000 Year 4: 115,000 The analyst has determined an appropriate discount rate is 26% and the long-term growth rate is 2%. What is the terminal value? a. 175,596 b. 190,229 C. 187,096 d. 202,687
Transcribed Image Text:65. A company has a five year weighted average after tax cash flow of $125,000. It has been determined the discount rate is 19%, short term expected growth is 11%, and long-term sustainable growth is 3%. The analyst has also determined excess cash of $25,000. What is the value of the company based on the capitalization of after tax cash flows? a. $625,000 b. $657,895 c. $781,250 d. $909,090 66. ABC Company has projected the following cash flows: Year 1: 85,000 Year 2: 105,000 Year 3: 109,000 Year 4: 115,000 The analyst has determined an appropriate discount rate is 26% and the long-term growth rate is 2%. What is the terminal value? a. 175,596 b. 190,229 C. 187,096 d. 202,687
Expert Solution
steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS