INTERMEDIATE FINANCIAL MANAGEMENT
14th Edition
ISBN: 9780357516669
Author: Brigham
Publisher: CENGAGE L
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Chapter 8, Problem 13P
Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years, after which FCF is expected to grow at a constant 7% rate. Dozier’s weighted average cost of capital is WACC = 13%.
- a. What is Dozier’s horizon value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3.)
- b. What is the current value of operations for Dozier?
- c. Suppose Dozier has $10 million in marketable securities, $100 million in debt, and 10 million shares of stock. What is the intrinsic price per share?
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Calculating interest rates - Excel
PAGE LAYOUT
FORMULAS
DATA
11
Α΄ Α΄
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A
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4
17
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Alignment Number Conditional Format as Cell Cells
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Solve for the unknown interest rate in each of the following:
Complete the following analysis. Do not hard code
values in your calculations. All answers should be
positive.
7
8
Present value
Years
Interest rate
9
10
11
SA SASA A
$
181
4
$
335
18
$
48,000
19
$
40,353
25
12
13
14
15
16
$
SA SA SA A
$
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Canning Machine
2
Monster Beverage is considering purchasing a new canning machine.
This machine costs $3,500,000 up front.
Required return = 12.0%
Year
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0
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1
$1,000,000
2
$1,200,000
3
$1,300,000
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to the present?
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Finances
Income Statement
Balance Sheet
Finances
Income Statement
Balance Sheet
Materia
Income Statement
Balance Sheet
FY23
FY24
FY23
FY24
FY23
FY24
Sales
Cost of Goods Sold
11,306,000,000
5,088,000,000
13,206,000,000
Current
Current Assets
5,943,000,000
Other Expenses
4,523,000,000
5,283,000,000
Cash
211,000,000
328,600,000
Liabilities
Accounts Payable
621,000,000
532,000,000
Depreciation
905,000,000
1,058,000,000
Accounts
502,000,000
619,600,000
Notes Payable
376,000,000
440,000,000
Earnings Before Int. & Tax
790,000,000
922,000,000
Receivable
Interest Expense
453,000,000
530,000,000
Total Current
Inventory
41,000,000
99,800,000
997,000,000
972,000,000
Taxable Income
337,000,000
392,000,000
Liabilities
Taxes (25%)
84,250,000
98,000,000
Total Current
754,000,000
1,048,000,000
Long-Term Debt
16,529,000,000
17,383,500,000
Net Income
Dividends
252,750,000
294,000,000
Assets
0
0
Fixed Assets
Add. to Retained Earnings
252,750,000
294,000,000
Net Plant &
20,038,000,000
21,722,000,000…
Chapter 8 Solutions
INTERMEDIATE FINANCIAL MANAGEMENT
Ch. 8 - Define each of the following terms: a. Proxy;...Ch. 8 - Two investors are evaluating General Electric’s...Ch. 8 - A bond that pays interest forever and has no...Ch. 8 - Explain how to use the free cash flow valuation...Ch. 8 - Thress Industries just paid a dividend of 1.50 a...Ch. 8 - Prob. 7PCh. 8 - Prob. 8PCh. 8 - A company currently pays a dividend of $2 per...Ch. 8 - Prob. 10PCh. 8 - Value of Operations
Kendra Enterprises has never...
Ch. 8 - Free Cash Flow Valuation
Dozier Corporation is a...Ch. 8 - Brushy Mountain Mining Companys coal reserves are...Ch. 8 - Constant Growth Valuation Crisp Cookwares common...Ch. 8 - Prob. 17PCh. 8 - Prob. 18PCh. 8 - Nonconstant Growth Stock Valuation Simpkins...Ch. 8 - Prob. 20PCh. 8 - Prob. 1MCCh. 8 - Prob. 2MCCh. 8 - Prob. 3MCCh. 8 - Prob. 4MCCh. 8 - Use B&M’s data and the free cash flow valuation...Ch. 8 - Prob. 6MCCh. 8 - Prob. 7MCCh. 8 - Prob. 8MCCh. 8 - Prob. 9MCCh. 8 - Prob. 10MCCh. 8 - Prob. 11MCCh. 8 - Prob. 13MCCh. 8 - (1) Write out a formula that can be used to value...Ch. 8 - Assume that Temp Force has a beta coefficient of...Ch. 8 - Prob. 16MCCh. 8 - Now assume that the stock is currently selling at...Ch. 8 - Prob. 19MCCh. 8 - Prob. 20MCCh. 8 - Prob. 21MC
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