BсDE1 Using the set of assumptions calculate the NPV, BCR and IRR for this project:23 EBIT4 CapEx5 Depreciation6 Increased working capital7Shares outstanding8 Tax rate9 WACC10 Terminal growth rate11 Value of debt121314 EBIT15 Tax16 EAT17 Dep18 Cap expenditures19 Increase in WC20 FCF212223 WACC24 Terminal growth rate25Terminal value262728 Value of debt29 Value of equity30 Shares outstanding31 Estimated value per shareEstimated value of firm$120.0 million$25.0 million$15.0 million per year$18.0 million4.0 million21.00%12.50%4.00%$85.0 million17.50%21.00%10.00%12.50%4.00%1Year 1Year 1Fixed over 5 years2FGrowing atGrowing at3G17.50%10.00%4H5I6

With WACC, constant growth rate (g) and End year value (V), the terminal value is calculated as…

Answered: Using the set EBIT CapEx Depreciation…

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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Problem 20-03 Fill in the table using the following information.Assets required for operation: $11,000Firm A uses only equity financingFirm B uses 30% debt with an 8% interest rate and 70% equityFirm C uses 50% debt with a 10% interest rate and 50% equityFirm D uses 50% preferred stock financing with a dividend rate of 10% and 50% equity financingEarnings before interest and taxes: $1,100If your answer is zero, enter "0". Round your answers for monetary values to the nearest cent. Round your answers for percentage values to one decimal place. A B C D Debt $ $ $ $ Preferred stock $ $ $ $ Common stock $ $ $ $ Earnings before interest and taxes $1,100.00 $1,100.00 $1,100.00 $1,100.00 Interest expense $ $ $ $ Earnings before taxes $ $ $ $ Taxes (40% of earnings) $ $ $ $ Preferred stock dividends $ $ $ $ Income available to common stockholders $…
Reconsider Examples 11.7 and 11.8. The marginal income-tax rate (tm) for Capstone is expected to remain at 40% in the future. Assuming that Capstone's capital structure (debt ratio) also remains unchanged in the future, determine the cost of capital (k) of raising $55 million in addition to Capstone's existing capital.
What is the EPS in the following case? Debt : Equity ratio = 3:1 Total Capital employed = 20,00,000 Interest rate for debt = 8%, Tax rate = 40% Price per share = 100 EBIT = 4,00,000 a. 35.74 b. 33.6 c. 35.2 d. 31.85
GDP Growth in % Bivariate Fit of GDP Growth in % By Year 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 O r = 0.75 Or= .9 Or=0 2000 Or=-0.75 2005 ● 2010 Estimate the value of r based on the given scatterplot. Year 2015 2020
Chapter 10 Evaluation Calculating Weighted Average Cost of Capital and Economic Value Added (EVA) Ignacio, Inc., had after-tax operating income last year of $1,199,500. Three sources of financing were used by the company: $2 million of mortgage bonds paying 4 percent interest, $4 million of unsecured bonds paying 6 percent interest, and $10 million in common stock, which was considered to be relatively risky (with a risk premium of 8 percent). The rate on long-term treasuries is 3 percent. Ignacio, Inc., pays a marginal tax rate of 30 percent. Required: 1. Calculate the after-tax cost of each method of financing. Enter your answers as decimal values rounded to three places. For example, 4.36% would be entered as ".044". Mortgage bonds 0.028 ✓ Unsecured bonds 0.042 ✔ Common stock 8.64 X % eBook 2. Calculate the weighted average cost of capital for Ignacio, Inc. Round intermediate calculations to four decimal places. Round your final answer to four decimal places before converting to a…
Question content area top Part 1 Assume Gillette Corporation will pay an annual dividend of $ 0.66 one year from now. Analysts expect this dividend to grow at 11.2 % per year thereafter until the fifth year. Thereafter, growth will level off at 1.6 % per year. According to the DDM, what is the value of a share of Gillette stock if the firm's equity cost of capital is 8.3 % ? Question content area bottom Part 1 The value of Gillette's stock is $ enter your response here. (Round to the nearest cent.
Question 3 Gilmore Limited has the following projected equity cash flows (FCFE) and enterprise free cash flows (FCFF) over the next five years: $ millions Year FCFE Interest (1 - t) FCFF 1 120 30 150 2 125 32 157 3 132 33 165 4 140 35 175 5 150 37 187 Terminal Value 2,500 4,200 Note: terminal value is the value at the end of year 5. Gilmore Limited has a cost of equity of 12% and a WACC of 8%. a. What is the value of the equity? b. What is the value of the operations?
Melia Corporation Current share price $4.65 Current dividend $0.10 Required return on equity 6% Net Income $2.7 Mln Total shareholders’ equity $19 Mln Beta 1.15 Ten year Melia bond yield 3.8% Melia’s expected growth rate for the next five years is 18%, dropping to a long term sustainable rate into perpetuity of 4% For Melia, use a form of the dividend discount model to determine the fair value of the share price. Is Melia under or over-valued compared to the market
Q.The ASF Company was recently formed to manufacture a new product it has the following capital structure in market value terms Long term liabilities =6 Preferred stock =3 Common stock =8 Total =17 The company marginal tax rate of 40 % with interest expense per month 1. Dividend rate on preferred is 9% with per value of 1000 flotation cost is 10% on per value , dividend rate on common stock is 15% with per value of 10 Market value of share is 1 5 with growth rate 10% . Required Compute the firm present weighted average cost of capital?
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