Use the following information for numbers 23 to 25:Corporate Valuators, Inc. is assessing the value of two companies, Capital Corp. and Earm, Inc. which projects the followingnet cash flows in the next five years, with its desired required rate of return. Net cash flows approximate to be its earningsalso. The balance sheet of Capital Corp. and Eam, Inc. has recorded Property, Plant and Equipment of P100 million andP200 million, respectively. Operating assets are estimated at 80% and 70% respectively and the rest are considered idle.Capital Corp.8,000,0008,800,0009,680,00010,648,00011,712,800Required return 8%Net cash flows Net cash flowsEarn, Inc.9,600,00010,560,00011,616,00012,777,00014,055,36%Year123423. Using capitalization of earnings, compute for the equity value of Capital Corp.24. Using capitalization of earnings, compute for the equity value of Eam, Inc.25. Which company has higher equity value?

Given information : Year Capital corp Earn inc. 1 8000000 9600000 2 8800000 10560000 3…

tively. Operating assets are estimated at 80% and 70% respecti et cash flows Net cash flows apital Corp. 000,000 800,000 680,000 0,648,000 1,712,800 Earn, Inc. 9,600,000 10,560,000 11,616,000 12,777,000 14,055,360 6%

tively. Operating assets are estimated at 80% and 70% respecti et cash flows Net cash flows apital Corp. 000,000 800,000 680,000 0,648,000 1,712,800 Earn, Inc. 9,600,000 10,560,000 11,616,000 12,777,000 14,055,360 6%

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

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Use the following information for numbers 23 to 25:
Corporate Valuators, Inc. is assessing the value of two companies, Capital Corp. and Earm, Inc. which projects the following
net cash flows in the next five years, with its desired required rate of return. Net cash flows approximate to be its earnings
also. The balance sheet of Capital Corp. and Eam, Inc. has recorded Property, Plant and Equipment of P100 million and
P200 million, respectively. Operating assets are estimated at 80% and 70% respectively and the rest are considered idle.
Capital Corp.
8,000,000
8,800,000
9,680,000
10,648,000
11,712,800
Required return 8%
Net cash flows Net cash flows
Earn, Inc.
9,600,000
10,560,000
11,616,000
12,777,000
14,055,3
6%
Year
1
2
3
4
23. Using capitalization of earnings, compute for the equity value of Capital Corp.
24. Using capitalization of earnings, compute for the equity value of Eam, Inc.
25. Which company has higher equity value?

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NRH Corp.Common-sizeIncome Statement Sales 100% Cost of goods sold 63 Operating expenses 21 Interest expense 5 Income tax 4 Net income 7% Sales $8,000,000 NRH Corp. Common-size Balance Sheet Cash 5% Accounts receivable 20 Inventory 25 PP&E, net 50 Total assets 100% Short-term debt 20% Long-term debt 35 Common equity 45 Total liabilities and equity 100% Total assets $6,000,000 NRH Corp’s current ratio is closest to: 1.90. 1.20. 2.50. NRH Corp’s times interest earned ratio is closest to: 1.6. 7.0. 3.2.
using the income statement for chester corp below, what is operating cash flow (OCF) for the company? sales- 925,000 COGS- 458,000 Dep Exp- 195,000 EBIT- 272,000 Int exp- 55,800 EBT- 216,200 Taxes- 45,402 NI- 170,798
Given the following information: $8 million $10 million $7 million $3 million Average Inventory: $6 million Average A/R: Average Fixed Assets: Accounts Payables:$4 million Revenues: $2 million Liabilities: Total Expenses: Cost of Goods Sold: $10 million Assume no other assets or liabilities exist beyond what is articulated above. a. Compute Net Profit Margin b. Compute Total Asset Turnover c. Compute Return on Equity (ROE) d. Compute Inventory Turnover e. How much equity would have to be swapped out for debt to increase ROE by 1% assuming that nothing else changes? f. What is the firm's sustainable growth rate if dividends are equal to $0.5 million?
Large Company $ Net sales 379,420 163,100 216,320 Cost of sales Gross profit Selling, general, and administrative $ 146,610 expenses Operating income $ 69,720 Net income 41,610 50,480 Cash and cash equivalents Net receivables 17,400 Inventories 223,430 315,160 Total current assets Property and equipment 81,880 Other assets 66,040 Total assets 463,090 29,540 Accounts payable Stockholder equity 261,130 What is the value of C2C in weeks? (Choose the closest) 31.47 -12.81 -5.82 64.20 4.
You are given the following income statement and balance sheet: Income Statement Sales EBT Taxes (40%) Net Income Cash A/R Inventories Total CA Fixed Assets Total Assets $15,000 $800 $320 $480 Balance Sheet $100 $2,000 $4.000 Accounts Payable Debt Common Stock Retained Eamings $6,100 $1,900 $8,000 Total Claims $1,000 $4,000 $2,000 $1,000 $8,000 Now make the following forecast and assumptions for the upcoming year: Sales are expected to increase by $5.400 over the coming year. All assets and accounts payable can be expressed as a percentage of sales. The firm's profit margin will remain at 3.2 percent. The firm has a dividend payout rate of 75 percent. Using the equation method, determine the additional funds needed for the coming yea
Cost of goods sold: Investment income: Net sales: Operating expense: Interest expense: Dividends: Tax rate: Current liabilities: Cash: Long-term debt: Other assets: Fixed assets: Other liabilities: Investments: Operating assets: $ 169,000 $ 1,300 $ 282,000 $ 44,000 Book value per share Earnings per share Cash flow per share $ 7,400 $5,000 21% $ 22,000 $ 21,000 $ 92,000 $ 37,000 $ 120,000 $ 6,000 $ 33,000 $ 64,000 During the year, Smashville, Incorporated, had 20,000 shares of stock outstanding and depreciation expense of $15,000. Calculate the book value per share, earnings per share, and cash flow per share. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. $ 7.75

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