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 beendetermined the discount rate is 19%, short term expected growth is 11%, and long-term sustainablegrowth is 3%. The analyst has also determined excess cash of $25,000. What is the value of thecompany based on the capitalization of after tax cash flows?a. $625,000b. $657,895c. $781,250d. $909,09066. ABC Company has projected the following cash flows:Year 1: 85,000Year 2: 105,000Year 3: 109,000Year 4: 115,000The analyst has determined an appropriate discount rate is 26% and the long-term growth rate is2%. What is the terminal value?a. 175,596b. 190,229C. 187,096d. 202,687

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Answered: The price earnings ratios for 4 public…

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

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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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

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A4)
calculate the firms: d) P/E ratio given the market price above e) ROE, f) Debt-equity ratio g) Times Interest Earned Ratio, if interest and tax are 15% and 30% of sales respectively.
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Question: Fama's Llamas has a weighted average cost of capital of 9.5%. The company's cost of equity is 11%, and its cost of debt is 7.5%. The tax rate is 40%. What is the company's debt- equity ratio? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.)
Samuel Corp. provides the following information: EBIT = $386.50 Tax (TC ) = 21% Debt = $700 RU = 10% Question: What is the value of Samuel’s equity?
Use the following information for Cronos Group, Inc. (CRON): EBIT / Revenue 25.50% Government Tax Rate 42.50% Revenue / Assets 1.95 times Current Ratio 3.15 times EBT / EBIT 0.80 times Assets / Equity 2.00 times Its interest coverage ratio is closest to: A. 2.50. B. 5.00. C. 7.15. D. 9.25.
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5. Economic Value Added (EVA) Fink Company presents the following year-end data: Current assets Non-current assets Current liabilities Non-current liabilities (10% interest rate) Stockholders' equity Additional data: Income before interests and taxes: P 800,000. Income tax rate: 20%. Cost of equity capital: 12%. REQUIRED: 1. Weighted Average Costs of Capital (WACC) 2. Economic Value-Added (EVA) Book Value P 800,000 3,200,000 400,000 1,000,000 2,600,000 Fair Value P 1,000,000 3,000,000
Corporate Tax Rate Schedule Range of taxable income $0 to 50,000 to 75,000 to 100,000 to 335,000 to 10,000,000 to 15,000,000 to Over 18,333,333 $50,000 75,000 100,000 335,000 10,000,000 15,000,000 18,333,333 Base tax + + (15% $0 7,500 + (25% 13,750 + (34% 22,250 + (39% 113,900 + (34% 3,400,000 + (35% 5,150,000 + (38% 6,416,667 + (35% Tax calculation (Marginal ratex amount over base bracket) x amount over x amount over x amount over x amount over x amount over x amount over x amount over x amount over $0) 50,000) 75,000) 100,000) 335,000) 10,000,000) 15,000,000) 18,333,333)
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%

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