You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its future Investments in new plant and working capital Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation Pretax profit Tax at 30% Investment 5 83 23 60 18 12 Year $ 103 33 70 21 15 $ 118 38 30 24 18 $ 123 43 30 24 20 From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed 60% by equity and 40% by debt. its cost of equity is 14%, its debt yields 10%, and it pays corporate tax at 30% a. Estimate the company's total value. Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. b. What is the value of Laputa's equity? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. Answer is complete but not entirely correct.

You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its future Investments in new plant and working capital Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation Pretax profit Tax at 30% Investment 5 83 23 60 18 12 Year $ 103 33 70 21 15 $ 118 38 30 24 18 $ 123 43 30 24 20 From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed 60% by equity and 40% by debt. its cost of equity is 14%, its debt yields 10%, and it pays corporate tax at 30% a. Estimate the company's total value. Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. b. What is the value of Laputa's equity? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. Answer is complete but not entirely correct.

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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Mike Derr Company expects to earn 8% per year on an investment that will pay $616,000 seven years from now. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places.) Compute the present value of this investment. Future Value Table Factor Present Value
Project the OCFs for the next three years considering incomes of $165k, $170K and $180 respectively, and a depreciation of $15K, $16K and $18K respectively. Consider a tax of 25%. (Use the following format: "$11.111; $11.111; $11.111) Answer. $65.588;$69.325;$76.800 Then, calculate the NPV (of the three years projected, don't include the current one) if your investment is $150K and the cost of opportunity is 10% (use the following format: $11.111) Answer $24.619 Decide if you invest or not in this project (use the following format: "Yes" or "No") Answer NoI need the process please
The following is a four-year forecast for Torino Marine. Year Free cash flow ($ millions) 2022 -63 a. Fair market value b. Fair market value per share 2023 84 2024 101 a. Estimate the fair market value of Torino Marine at the end of 2021. Assume that after 2025, earnings before interest and tax will remain constant at $200 million, depreciation will equal capital expenditures in each year, and working capital will not change. Torino Marine's weighted-average cost of capital is 9 percent and its tax rate is 20 percent. Note: Do not round intermediate calculations. Enter your answer in millions rounded to 1 decimal place. million 2025 123 b. Estimate the fair market value per share of Torino Marine's equity at the end of 2021 if the company has 48 million shares outstanding and the market value of its interest-bearing liabilities on the valuation date equals $380 million. Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
pm.5
1a.Compute the net present value of this investment.b. Should Beyer accept the investment?
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Assume that today is December 31, 2021, and that the following information applies to Abner Airlines: ⚫ After-tax operating Income [EBIT(1-T)] for 2022 is expected to be $500 million. The depreciation expense for 2022 is expected to be $160 million. The capital expenditures for 2022 are expected to be $375 million. . No change is expected in net operating working capital. ⚫ The free cash flow is expected to grow at a constant rate of 7% per year. ⚫The required return on equity is 15%. The WACC is 10%. The firm has $204 million of nonoperating assets. ⚫ The market value of the company's debt is $2.885 billion. 190 million shares of stock are outstanding. Using the corporate valuation model approach, what should be the company's stock price today? Do not round intermediate calculations. Round your answer to the nearest cent.
1. Given the most recent financial statements for FY2023. Sales for FY2024 are expected to grow by 10 percent. The following assumption must be held in the pro forma financial statements. The tax rate (percentage), the interest expense ($ amount), and the dividend payout ratio (percentage) will remain constant. COGS, SGA, Depreciation, all current asset accounts, Net PPE, intangibles, other assets, and accounts payable increase spontaneously with sales. Calculate the pro forma value for total assets for FY24 if the firm operates at full capacity and no new debt or equity is issued. (Enter percentages as decimals and round to 4 decimals) 2. Given the most recent financial statements for FY2023. Sales for FY2024 are expected to grow by 10 percent. The following assumption must be held in the pro forma financial statements. The tax rate (percentage), the interest expense ($ amount), and the dividend payout ratio (percentage) will remain constant. COGS, SGA, Depreciation, all…
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3.) A project is estimated to cost $350,000, last 9 years, and have a salvage value of $90,000. The annual gross income is expected to average $54,000 and annual expenses excluding depreciation is $8,000. If capital is earning 15% before income taxes, determine if this is desirable investment using both PW and AW.
You are preparing the business plan for a new company. A net revenue analysis covering the first 6 years is required for obtaining financing. Net revenue in year 1 is expected to be $50,000 and increase by 15% each year, thereafter. If i = 12% and the net revenue is assumed to be an end-of-year cash flow, what is the present value of the cash flow series over the 6 years?
Sunshine Corporation is reviewing an investment proposal. The initial cost of the investment is R52 500. The estimated cash flows and net profit for each year are presented in the schedule below. All cash flows are assumed to take place at the end of the year. Year Net cash flows Net profit1 R20 000 R2 5002 R17 500 R3 5003 R15 000 R4 5004 R12 500 R5 5005 R10 000 R6 500 The cost of capital is 12%.Required:Calculate the following:1. Payback Period 2. Net Present value 3. Accounting rate of return

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