With APV model, the company should discount operating cash flows at: Cost of debt=6% O Cost of capital=8.74% O All-equity cost of capital-12% Cost of equity=27.84%
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Am. 112.
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- ) Assuming a 9% cost of capital, find the modified internal rate of return for the following cash flows: a. 19.78% b. 6.95% c. 13.64% d. 7.86% Year Cash Flow 0 1 2 3 -$175 $167 $240 -$120Q2. Given: Revenues/Total assets 13.5% Return on assets (ROA) 1.72% Return on equity (ROE) 18.20% Calculate Community Bank’s leverage multiplier and profit marginGiven cash flows for Concatenator Manufacturing Division, calculate PV of near- term cash flows, PV (horizon value), and total value of firm; r = 10% and g = 6% 1 2 3 4 5 6 7 8 9 10 Asset value 10.00 11.20 12.54 14.05 15.31 16.69 18.19 19.29 20.44 21.67 Earnings 1.20 1.34 1.51 1.69 1.84 2.00 2.18 2.31 2.45 2.60 Net investment 1.20 1.34 1.51 1.26 1.38 1.50 1.09 1.16 1.23 1.30 Free cash flow (FCF) 0.00 0.00 0.00 0.42 0.46 0.50 1.09 1.16 1.23 1.30 Return on equity (ROE) 0.12 0.12 0.12 0.12 0.12 0.12 0.12 0.12 0.12 0.12 Asset growth rate 0.12 0.12 0.12 0.09 0.09 0.09 0.06 0.06 0.06 Earnings growth rate 0.12 0.12 0.12 0.09 0.09 0.09 0.06 0.06 0.06 4-30
- Bank ABC has a Return on Equity (ROE) equal to 24%, an equity/debt ratio equal to 0.05 and an asset utilisation ratio equal to 0.07. From this we know that the profit margin of bank ABC is?Which of the following is a section of a cash flow statement? Select one: a.Fixed costs outflows b.Cash basis accounting systems c.Wage taxes d.EIN Question 22 Question text If you invest $1,525,000 in a business and earn a return of $775,000, what is your ROI? Select one: a.42% b.45% c.51% d.1.96% Question 23 Question text If Jacques invests $20,000 at 10% interest for 3 years, what will the future value of the money be? Select one: a.$26,620.00 b.$6620.00 c.$20,606.02 d.$26,000.00 Question 24 Question text Two common risks to cash flow stability are ________ and ________. Select one: a.credit squeeze; burn rate b.surplus inventory; pilferage c.burn rate; pilferage d.surplus inventory; credit squeeze Question 25 Question text A suggested allowance for contingencies and emergencies at start-up is _____ of estimated start-up costs. Select one: a.5 percent b.10 percent c.25 percent d.40 percentBank ABC has a Return on Equity (ROE) equal to 22%, a total assets/debt ratio equal to 1.02 and an asset utilisation ratio equal to 0.02. From this we know that the profit margin of bank ABC is:
- Below you will find the operating cash flows (Free Cash Flow) for ABC Corp. The company has a 11% weighted average cost of capital. Assuming that you are using an exit multiple approach to analyze ABC Corp, what is the Enterprise Value using an exit multiple of 7 (EV/EBITDA = 7x)? Dollars in millions Sales -Cash COGS and SG&A EBITDA -Tax basis D&A Operating Income -Taxes Net Operating Profit After Taxes +Depreciation & Amortization -Capex for PP&E -Working Capital Changes Operating Cash Flow Cost of Capital Present Value of Cash Flows $879.16 million $921.69 million $904.77 million $924.61 million 2023 500 400 100 14.1 85.9 21.48 64.43 14.1 17.2 2.2 59.13 Projected FYE 12/31 2024 560 448 112 16.2 95.8 23.95 71.85 16.2 19.26 2.46 66.32 2025 627.2 501.76 125.44 18.4 107.04 26.76 80.28 18.4 21.58 2.76 74.34 2026 702.46 561.97 140.49 20.6 119.89 29.97 89.92 20.6 24.16 3.09 83.26 2027 786.76 629.41 157.35 18.4 138.95 34.74 104.21 18.4 27.06 3.46 92.09Show solutionb) Use the free cashflow model to calculate the value of the company. (10) Year 0 1 2 3 Free cash flows Terminal value* Net relevant cash flows P/Y CF0 CF1 CF, 2 CF3 NPV FCF per share
- A manufacturer projects the cash flows shown below. Determine the rate of return if the cash flows occur as projected. Year Cash Flow, $ 0 -733,000 1 -467,000 2 215,000 3 279,000 4 – 8 309,000use the following information to develop a spreadsheet model that will calculate the free cash flows and the value of the equity for the company. cost of capital 12% most recent year's sales $1000 nonoperating assets $100 interest-bearing debt $250 operating profit margin 12% working capital/sales 35% fixed assets/sales 20% noninterest-bearing current liabilities/sales 10% rax rate 40% forecasted sales growth years 1-2 12% years 3-5 8% years 6-∞ 4% calculate the value of the firm and the value of the equity in the firm using DCF analysis.What is the profitability...accounting questions....
