The net operating profit after taxes (NOPAT), total net operating capital (OpCap), free cash flow (FCF), growth rate in FCF, and return on invested capital (ROIC) for the next 3 years and FCF growth rate for Year 3 and the way it compares with the growth rate in sales and ROIC for Year 3 and the way it compare with the WACC 15%.

Question

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Answer 1

Question

Chapter 7, Problem 23SP

a)

Summary Introduction

To determine: The net operating profit after taxes (NOPAT), total net operating capital (OpCap), free cash flow (FCF), growth rate in FCF, and return on invested capital (ROIC) for the next 3 years and FCF growth rate for Year 3 and the way it compares with the growth rate in sales and ROIC for Year 3 and the way it compare with the WACC 15%.

b)

Summary Introduction

To discuss: The value of operations at Year 3 and current value of operations and compare the value of operations at Year 0 with total net operating working capital at Year 3 and explain its relationship.

c)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change.

d)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

e)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

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Given the information below for HooYah! Corporation, compute the expected share price at the end of 2026 using price ratio analysis. Assume that the histor (arithmetic) average growth rates will remain the same for 2026. end of Year 2020 2021 2022 2023 2024 2025 Price $ 27.00 $ 63.50 $ 135.00 $ 212.00 $ 102.00 $ 32.50 EPS -7.00 -6.29 -2.30 -0.57 0.05 0.06 CFPS -18.00 -15.50 -3.30 -0.05 0.63 0.08 SPS 24.00 32.50 27.60 31.10 34.60 40.95 What is the expected share price at the end of 2026, using PE ratio? $110.45 $100.45 $120.45 $90.45 22 Multiple Choice Given the information below for HooYah! Corporation, compute the expected share price at the end of 2026 using price ratio analysis. Assume that the histor (arithmetic) average growth rates will remain the same for 2026. end of Year 2020 2021 2022 2023 2024 2025 Price $ 27.00 $ 63.50 $ 135.00 $ 212.00 $ 102.00 $ 32.50 EPS -7.00 -6.29 -2.30 -0.57 0.05 0.06 CFPS -18.00 -15.50 -3.30 -0.05 0.63 0.08 SPS 24.00 32.50 27.60 31.10 34.60 40.95…

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Answer 2

Question

Chapter 7, Problem 23SP

a)

Summary Introduction

To determine: The net operating profit after taxes (NOPAT), total net operating capital (OpCap), free cash flow (FCF), growth rate in FCF, and return on invested capital (ROIC) for the next 3 years and FCF growth rate for Year 3 and the way it compares with the growth rate in sales and ROIC for Year 3 and the way it compare with the WACC 15%.

b)

Summary Introduction

To discuss: The value of operations at Year 3 and current value of operations and compare the value of operations at Year 0 with total net operating working capital at Year 3 and explain its relationship.

c)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change.

d)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

e)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

Expert Solution & Answer

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Answer 3

Question

Chapter 7, Problem 23SP

a)

Summary Introduction

To determine: The net operating profit after taxes (NOPAT), total net operating capital (OpCap), free cash flow (FCF), growth rate in FCF, and return on invested capital (ROIC) for the next 3 years and FCF growth rate for Year 3 and the way it compares with the growth rate in sales and ROIC for Year 3 and the way it compare with the WACC 15%.

b)

Summary Introduction

To discuss: The value of operations at Year 3 and current value of operations and compare the value of operations at Year 0 with total net operating working capital at Year 3 and explain its relationship.

c)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change.

d)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

e)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

Expert Solution & Answer

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Answer 4

Question

Chapter 7, Problem 23SP

a)

Summary Introduction

To determine: The net operating profit after taxes (NOPAT), total net operating capital (OpCap), free cash flow (FCF), growth rate in FCF, and return on invested capital (ROIC) for the next 3 years and FCF growth rate for Year 3 and the way it compares with the growth rate in sales and ROIC for Year 3 and the way it compare with the WACC 15%.

b)

Summary Introduction

To discuss: The value of operations at Year 3 and current value of operations and compare the value of operations at Year 0 with total net operating working capital at Year 3 and explain its relationship.

c)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change.

d)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

e)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 5

Chapter 7, Problem 23SP

a)

Summary Introduction

To determine: The net operating profit after taxes (NOPAT), total net operating capital (OpCap), free cash flow (FCF), growth rate in FCF, and return on invested capital (ROIC) for the next 3 years and FCF growth rate for Year 3 and the way it compares with the growth rate in sales and ROIC for Year 3 and the way it compare with the WACC 15%.

b)

Summary Introduction

To discuss: The value of operations at Year 3 and current value of operations and compare the value of operations at Year 0 with total net operating working capital at Year 3 and explain its relationship.

c)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change.

d)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

e)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

Answer 6

Chapter 7, Problem 23SP

a)

Summary Introduction

To determine: The net operating profit after taxes (NOPAT), total net operating capital (OpCap), free cash flow (FCF), growth rate in FCF, and return on invested capital (ROIC) for the next 3 years and FCF growth rate for Year 3 and the way it compares with the growth rate in sales and ROIC for Year 3 and the way it compare with the WACC 15%.

Answer 7

Chapter 7, Problem 23SP

a)

Summary Introduction

To determine: The net operating profit after taxes (NOPAT), total net operating capital (OpCap), free cash flow (FCF), growth rate in FCF, and return on invested capital (ROIC) for the next 3 years and FCF growth rate for Year 3 and the way it compares with the growth rate in sales and ROIC for Year 3 and the way it compare with the WACC 15%.

Answer 8

b)

Summary Introduction

To discuss: The value of operations at Year 3 and current value of operations and compare the value of operations at Year 0 with total net operating working capital at Year 3 and explain its relationship.

Answer 9

b)

Summary Introduction

To discuss: The value of operations at Year 3 and current value of operations and compare the value of operations at Year 0 with total net operating working capital at Year 3 and explain its relationship.

Answer 10

c)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change.

Answer 11

c)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change.

Answer 12

d)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

Answer 13

d)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

Answer 14

e)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

Answer 15

e)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

Answer 16

Expert Solution & Answer

Answer 17

Expert Solution & Answer

Answer 18

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Answer 19

Ch. 7 - Two investors are evaluating General Electric’s...Ch. 7 - A bond that pays interest forever and has no...Ch. 7 - Explain how to use the free cash flow valuation...Ch. 7 - EMC Corporations current free cash flow is 400,000...Ch. 7 - Thress Industries just paid a dividend of $1.50 a...Ch. 7 - Boehm Incorporated is expected to pay a 1.50 per...Ch. 7 - Woidtke Manufacturing’s stock currently sells for...Ch. 7 - A company currently pays a dividend of $2 per...Ch. 7 - Nick’s Enchiladas has preferred stock outstanding...Ch. 7 - Kendra Enterprises has never paid a dividend. Free...

Solution Summary: The author compares the value of operations at Year 3 and the current value at 807.119. The growth in sales after year 1 is 7%, but the ROIC is lower than the WACC.

To discuss: The value of operations at Year 3 and current value of operations and compare the value of operations at Year 0 with total net operating working capital at Year 3 and explain its relationship.

To discuss: The new value of operations and whether it raises or declines and the reason for its change.

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

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Chapter 7 Solutions