You are managing a product line at Polar Gear Inc., which has a degree of operating leverage (DOL) of 2.4. What will happen to the operating cash flows if the number of units you sell increases by 7.5%?
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- You have the following cash flows for the firm; What is NPV, if discount rate is 10% ? CF0 = -493 (CF0 is always negative. It is your initial investment) CF1 = 982 CF2 = 879 CF3 = 736 CF4 = 740 CF5 = 969Find the present value of the streams of cash flows shown in the following table. Assume that the firm's opportunity cost is 12%. A B C Year Cash Flow Year Cash Flow Year Cash Flow 1 -$2,000 1 $ 10,000 1-5 $ 10,000/yr 2345 5 2 3,000 2-5 5,000/yr 6-10 8,000/yr 4,000 6 7,000 6,000 8,000Assume a company is going to make an investment in a machine of $825,000 and the following are the cash flows that two different products would bring. Which of the two options would you choose based on the payback method?
- You are building a free cash flow to the firm model. You expect sales to grow from $1.6 billion for the year that just ended to $1.84 billion five years from now. Assume that the company will not become any more or less efficient in the future. Assume that the company will grow at a constant rate for 5 years, and then at a constant rate of 2.334672% for year 5 and onward after that. Use the following information to calculate the value of the equity on a per-share basis. a. Assume that the company currently has $528 million of net PPSE. b. The company currently has $176 million of net working capital. c. The company has operating margins of 10 percent and has an effective tax rate of 30 percent. d. The company has a weighted average cost of capital of 9 percent. This is based on a capital structure of two-thirds equity and one-third debt. e. The firm has 2 million shares outstanding. Do not round intermediate calculations. Round your answer to the nearest cent. SYou are building a free cash flow to the firm model. You expect sales to grow from $1.6 billion for the year that just ended to $1.84 billion five years from now. Assume that the company will not become any more or less efficient in the future. Assume that the company will grow at a constant rate for 5 years, and then at a constant rate of 2.334672% for year 6 and onward after that. Use the following information to calculate the value of the equity on a per-share basis. Assume that the company currently has $432 million of net PP&E. The company currently has $144 million of net working capital. The company has operating margins of 11 percent and has an effective tax rate of 32 percent. The company has a weighted average cost of capital of 10 percent. This is based on a capital structure of two-thirds equity and one-third debt. The firm has 2 million shares outstanding. Do not round intermediate calculations. Round your answer to the nearest cent. $You are building a free cash flow to the firm model. You expect sales to grow from $1.8 billion for the year that just ended to $1.98 billion five years from now. Assume that the company will not become any more or less efficient in the future. Assume that the company will grow at a constant rate for 5 years, and then at a constant rate of 1.424488% for year 6 and onward after that. Use the following information to calculate the value of the equity on a per-share basis. a. Assume that the company currently has $540 million of net PP&E. b. The company currently has $180 million of net working capital. c. The company has operating margins of 12 percent and has an effective tax rate of 29 percent. d. The company has a weighted average cost of capital of 10 percent. This is based on a capital structure of two-thirds equity and one-third debt. e. The firm has 3 million shares outstanding. Do not round intermediate calculations. Round your answer to the nearest cent. $ +A
- A firm wants to start a project. A team of financial analysts estimated the following cash flows year cash flow 0 -$100,000 1 55,000 2 43,000 3 45,000 Suppose that the discount rate (interest rate) is 12%. The profitability index (PI) is Group of answer choices 15,416.59 1.15 0.87 2.15If a firm’s earnings per share grew from $1 to $2 over a 10-year period, the total growth would be 100 percent, but the annual growth rate would be less than 10 percent. True or false? Explain. Under what conditions would the annual growth rate actually be 10 percent per year? (LO 4-2 & LO 4-4) Using one of the equations or multiple in the picture attached.First draw a cash flow diagram for the cash flow series shown below. Then write an expression (e.g., P= 500(P/A 5%, 3) + 100(P/G 5%, 3) + ...) for the present worth of the following cash flow series. You must use at least one uniform series factor, at least one gradient series factor, and at least one geometric series factor. i= 5% per period. ΕΟΥ 1 5 4 -3,000 -9,000 -9,300 |-9,600 |-9,900 | 7,000 5,000 6,000 7,200 2 3 7 9 10 Cash 8,640 | 10,000 Flow a) b) Draw the cash flow diagram for the above cash flow series. Write down the expression for the present worth of the above cash flow series.
- You are evaluating Adidas and expect it to generate the following free cash flows over your forecast horizon: Year 1 2 3 4 5 FCF ($ millions) 53.1 66.9 77.8 75.5 82.1 After your forecast horizon, you expect FCF to grow at 4.3% per year forever. If the weighted average cost of capital (dsicount rate) is 13.8%, what is: a. The enterprise value of Adidas. b. Assume Adidas has no excess cash, debt of $318 million, and 39 million shares outstanding, what is its stock price? Question content area bottom Part 1 a. The enterprise value will be $enter your response here million. (Round to two decimal places.) b. The stock price will be $enter your response here. (Round to two decimal places.)HappyTunes Inc. forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 11.75%, the cost of equity is 19.25%, and the FCFs are expected to continue growing at a 5.25% rate after Year 5. Assuming that the ROIC is expected to remain constant in Year 5 and beyond, what is the Year O value of operations? Year: 1 2 3 4 5 Free cash flow: -$995 $15 $55 $80 $125 O-$310.32 million O $387.53 million O $139.31 million $445.46 million O-$176.72 milli2. In the working capital management, we know about cash conversion cycle model. For problem if average inventories are $3 million and sales are $11 million. If receivables are $ 657.535 and sales are $ 11 million. Then, if its cost of goods sold are $9 million per year and if its accounts payable average S 657.535. What is the length of the cash conversion cicle?