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The MoMi Corporation’s income before interest, depreciation and taxes, was $2.3 million in the year just ended, and it expects that this will grow by 5% per year forever. To make this happen, the firm will have to invest an amount equal to 17% of pretax cash flow each year. The tax rate is 30%. Depreciation was $290,000 in the year just ended and is expected to grow at the same rate as the operating cash flow. The appropriate market capitalization rate for the unleveraged cash flow is 12% per year, and the firm currently has debt of $5 million outstanding. Use the free cash flow approach to calculate the value of the firm and the firm’s equity. (Enter your answer in dollars not in millions.)
Value of the firm $
Value of the firm's equity $
what is the after tax salvage cash flow for this new machine at the end of the project?
Little Books Inc. recently reported $6 million of net income. Its EBIT was $13.8 million, and its tax rate was 40%. What was its interest expense? Write out the headings for an income statement and then fill in the known values. Then divide $6 millio..
Company K is considering two mutually exclusive projects. The cash flows outlay and incomes of the projects are: Compute the payback period for each project. Compute the NPV for each project, assuming a 13% required rate of return. Compute the Profit..
Fresno Corp. is a fast-growing company that expects to grow at a rate of 25 percent over the next two years and then to slow to a growth rate of 17 percent for the following three years. If the last dividend paid by the company was $2.15. What is the..
Valuation – options. The following information refers to a six-month call option on the stock of XYZ, Inc. What is the intrinsic value of the option? What is the option’s time premium at this price?
10 years ago, Weed Go Inc. earned $0.93 per share. Its earnings this year were $3.64. What was the growth rate in earnings per share (EPS) over the 10-year period? State your answer as a percentage to two decimal places (e.g. 16.38%). The % sign is n..
Given the following information for ABC corp., find the WACC. Assume the company’s tax rate is 35%. Debt: 3,000 8 percent coupon bonds outstanding, 20 years to maturity, selling for 103 percent of par; the bonds make semi-annual payments.
government bond with a coupon rate of 6% makes semiannual coupon payments on January 13 and July 13 of each year. What is the invoice price of the bond?
what is the minimum expected annual return for Stock 3 that will enable Michele to achieve her investment requirement?
A friend of yours just bought a new sports car with a $4,000 down payment, and her $25,000 car loan is financed at an interest rate of 0.25% per month for 48 months. After 2 years, the "Blue Book" value of her vehicle in the used-car marketplace is $..
Briefly describe the following healthcare service settings and offer your thoughts on which will have the most impact on our national economy in the next five years. Identify the top three benefits attributed to integrated delivery systems.
What other package (Investment in Company O) would produce the identical cash flows for Flowers?
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