EBK PERSONAL FINANCE
7th Edition
ISBN: 9780100659711
Author: KEOWN
Publisher: YUZU
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Chapter 8, Problem CC.15Q
Part II: Managing Your Money
Cory and Tisha are back asking for your help, only this time the topics are cash management, credit use, and major purchases. Tempting credit card offers continue to come in the mail. Recall that they have Visa, MasterCard, Discover, and American Express credit cards, as well as several store cards, with a combined average balance of $1,300. Minimum monthly payments equal approximately $50, although they typically pay $100 per month.
Tisha's sister and her husband just bought their first home, making Tisha even more anxious to move from their rented house. Cory wants to wait a while longer before buying a home and has suggested that they should replace their older, high-mileage car. Cory and Tisha realize that funds for another payment are limited, not to mention money for a house payment. Their options are to reduce the payments on their credit cards and to reduce other expenses. At any rate, $300 a month seems to be the maximum amount available for an auto loan, not to mention any likely increase in their auto insurance premium associated with the new vehicle. Help them answer the following questions.
15. Help Cory and Tisha apply the four steps of the smart buying process to decide whether or not to replace their car. What sources of consumer information might be useful to them?
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(d) Estimate the value of a share of Cisco common stock using the discounted cash flow (DCF) model as of July 27, 2019 using the following assumptions
Assumptions
Discount rate (WACC)
Common shares outstanding
7.60%
5,029.00 million
Net nonoperating obligations (NNO) $(8,747) million
NNO is negative, which means that Cisco has net nonoperating investments
CSCO
($ millions)
DCF Model
Reported
2019
Forecast Horizon
2020 Est.
2021 Est.
2022 Est.
2023 Est.
Terminal
Period
Increase in NOA
FCFF (NOPAT - Increase in NOA)
$
1241
1303
1368
10673
11207
11767
1437 $
12354
302 ✓
Present value of horizon FCFF
9918
9679
9445 ✔
0 ×
Cum. present value of horizon FCFF $
0 ×
Present value of terminal FCFF
0 ☑
Total firm value
0 ☑
NNO
-8747 ✓
Firm equity value
$
0 ☑
Shares outstanding (millions)
5029
Stock price per share
$
40.05
Don't used hand raiting and don't used Ai solution
Don't used hand raiting and don't used Ai solution
Chapter 8 Solutions
EBK PERSONAL FINANCE
Ch. 8 - Prob. 1PACh. 8 - Prob. 2PACh. 8 - Prob. 3PACh. 8 - Prob. 4PACh. 8 - Prob. 5PACh. 8 - Prob. 6PACh. 8 - Prob. 7PACh. 8 - Prob. 8PACh. 8 - Prob. 9PACh. 8 - Prob. 10PA
Ch. 8 - Prob. 1DC1Ch. 8 - Prob. 2DC1Ch. 8 - Prob. 3DC1Ch. 8 - Prob. 4DC1Ch. 8 - Prob. 5DC1Ch. 8 - Prob. 6DC1Ch. 8 - Prob. 7DC1Ch. 8 - Prob. 1DC2Ch. 8 - With a raise from his investment firm, Seyed...Ch. 8 - Prob. 3DC2Ch. 8 - Prob. 4DC2Ch. 8 - With a raise from his investment firm, Seyed...Ch. 8 - Prob. 6DC2Ch. 8 - Prob. 7DC2Ch. 8 - Prob. 8DC2Ch. 8 - Prob. 9DC2Ch. 8 - Prob. CC.1QCh. 8 - Prob. CC.2QCh. 8 - Prob. CC.3QCh. 8 - Prob. CC.4QCh. 8 - Prob. CC.5QCh. 8 - Prob. CC.6QCh. 8 - Prob. CC.7QCh. 8 - Prob. CC.8QCh. 8 - Prob. CC.9QCh. 8 - Prob. CC.10QCh. 8 - Prob. CC.11QCh. 8 - Prob. CC.12QCh. 8 - Prob. CC.13QCh. 8 - Prob. CC.14QCh. 8 - Part II: Managing Your Money Cory and Tisha are...Ch. 8 - Prob. CC.16QCh. 8 - Prob. CC.17QCh. 8 - Prob. CC.18QCh. 8 - Prob. CC.19QCh. 8 - Prob. CC.20QCh. 8 - Prob. CC.21QCh. 8 - Prob. CC.22QCh. 8 - Prob. CC.23QCh. 8 - Prob. CC.24QCh. 8 - Prob. CC.25QCh. 8 - Prob. CC.26QCh. 8 - Prob. CC.27QCh. 8 - Prob. CC.28QCh. 8 - Prob. CC.29Q
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