Vijay Victoria Enterprises expects earnings before interest and taxes (EBIT) next year of 1.3 million. Its depreciation and capital expenditures will both be $303,000, and it expects its capital expenditures to always equal its depreciation. Its working capital will increase by$48,000 over the next year. Its tax rate is 25%. If its WACC is 10% and its FCFs are expected to increase at 3% per year in perpetuity, what is its enterprise value?The company's enterprise value today is $(Round to the nearest dollar.)

Free Cash Flow=EBIT∗(1−t)+Depreciation−Capital expenditure−Increase in…

Answered: Victoria Enterprises expects earnings…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 20EA: Towson Industries is considering an investment of $256,950 that is expected to generate returns of...

See similar textbooks

Similar questions

Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1 and by 5% in Year 2. Its operating profitability ratio (OP) is 10%, and its capital requirement ratio (CR) is 80%? What are the projected sales in Years 1 and 2? What are the projected amounts of net operating profit after taxes (NOPAT) for Years 1 and 2? What are the projected amounts of total net operating capital (OpCap) for Years 1 and 2? What is the projected FCF for Year 2?
Victoria Enterprises expects earnings before interest and taxes (EBIT) next year of $2.1 million. Its depreciation and capital expenditures will both be $296,000, and it expects its capital expenditures to always equal its depreciation. Its working capital will increase by $50,000 over the next year. Its tax rate is 22%. If its WACC is 8% and its FCFs are expected to increase at 5% per year in perpetuity, what is its enterprise value? The company's enterprise value is $ (Round to the nearest dollar.)
Victoria Enterprises expects earnings before interest and taxes (EBIT) next year of $1.6 million. Its depreciation and capital expenditures will both be $301,000, and it expects its capital expenditures to always equal its depreciation. Its working capital will increase by $47,000 over the next year. Its tax rate is 30%. If its WACC is 8% and its FCFs are expected to increase at 5% per year in perpetuity, what is its enterprise value?
The XYZ Corporation expects to have sales of $15 million this year. Costs other than depreciation are expected to be 80% of sales, and depreciation is expected to amount to $1 million. XYZ is using $5 million debt at 10%. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. XYZ's federalolus - state tax rate is 30%. What is XYZ's expected cash flow from operations? (Assume no other changes occurred.)
1LMN Corporation has projected that their performance for the next five years will result to the following (see table below). The corporation owns a property originally acquired at P5 million with useful life of 10 years. The terminal value was assumed based on the growth rate of the cash flows. Capital investment is needed on Year 1 amounting to P1 million. Income tax rate is at 30%. The required rate of return for this business is 12%. Calculate the maximum price at which an investor will purchase 40% of LMN Corporation (round the growth rate to four decimal point).
What is the payback period of this financial accounting question?
Crarytown Motors is expected to have an EBIT of $680,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $45,000, $9,000, and $40,000respectively. All cash flow items are expected to grow at 6 percent per year for two years. After Year 3, the CFA is expected to grow at 3 percent indefinitely. The company currently has $3.5 million in debt and 250,000 shares outstanding The company's WACC is 9.5 percent and the tax rate is 20 percent. What is the present value of terminal value? Show your steps.
Crazytown Motors is expected to have an EBIT of $680,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $45,000, $9,000, and $40,000, respectively. All cash flow items are expected to grow at 6 percent per year for two years. After Year 3, the CFA is expected to grow at 3 percent indefinitely. The company currently has $3 million in debt and 250,000 shares outstanding. The company's WACC is 9.5 percent and the tax rate is 20 percent. What is the present value of terminal value? Show your steps. What is the price per share of the company's stock? Show your steps.
A project requires an initial investment of $200,000 and expects to produce a cash flow before taxes of $120,000 per year for two years (i.e., cash flows will occur at t= 1 and t= 2). The corporate tax rate is 21 percent. The assets will depreciate using the MACRS 3-year schedule: (t = 1, 33%); (t = 2: 45% ); (t = 3: 15%); ( t = 4: 7%). The company's tax situation is such that it can use all applicable tax shields. The opportunity cost of capital is 12 percent. Assume that the asset can sell for book value at the end of the project. Calculate the NPV of the project (approximately). Multiple Choice $22,463 $19,315 $22,735 $5,721
The Netflix Corporation's cash flow from operations before interest and taxes was $5.25 milion in the year just ended, and it expects that this will grow by 6.5% per year for six years and 5.75% per year in perpetuity. To make this happen, the firm will have to invest an amount equal to 25% of pretax cash flow each year. The tax rate is 21%. Depreciation was $275,000 in the year just ended and is expected to grow at the same rate as the opening cash flow. The apropriate market capitalization rate for the unleveraged cash flow is 13.25% per year, and the firm currently has debt of $5.75 million outstanding and 4,250,000 shares outstanding. Use the free cash flow approach to calculate the price per share.
The Podrasky Corporation is considering a $250 million expansion (capital expenditure) program next year. The company currently has $400 million in net fixed assets on its books. Next year, the company expects to earn $90 million after interest and taxes. The company also expects to maintain its present level of dividends, which is $10 million. If the expansion program is accepted, the company expects its inventory and accounts receivable each to increase by approximately $10 million next year. Long-term debt retirement obligations total $10 million for next year, and depreciation is expected to be $75 million. The company does not expect to sell any fixed assets next year. The company maintains a cash balance of $2 million, which is sufficient for its present operations. If the expansion is accepted, the company feels it should increase its year-end cash balance to $10 million because of the increased level of activities. For planning purposes, assume no other cash flow changes for…
The Seattle Corporation has been presented with an investment opportunity which will yield cash flows of $30,000 per year in Years 1 through 4, $35,000 per year in Years 5 through 9, and $40,000 in Year 10. This investment will cost the firm $150,000 today, and the firm's cost of capital is 10 percent. Assume cash flows occur evenly during the year, 1/365th each day. What is the payback period for this investment

SEE MORE QUESTIONS

Recommended textbooks for you

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

SEE MORE TEXTBOOKS