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Caballos, Inc., has a debt to capital ratio of 11%, a beta of 1.81 and a pre-tax cost of debt of 5.5%. The firm had earnings before interest and taxes of $ 756 million for the last fiscal year, after depreciation charges of $ 204 million. The firm had capital expenditures of $ 338 million, and non-cash working capital increased by $ 32 million. The firm also had a book value of capital of $ 2.1 billion at the beginning of the last fiscal year. (The treasury bond rate is 4.8 %, the market risk premium is 6.8 % and the firm has a tax rate of 40 %). Assume that the firm is in stable growth, and that the return on capital and reinvestment rates for the last fiscal year can be sustained forever. Estimate the FCFF. Answer format is the 0 decimal places (1234).
Kohwe Corporation plans to borrow $ 47.8 million to finance a new investment. The firm will pay interest only on this loan each year, and it will maintain an outstanding balance of $47.8 million on the loan. Suppose the appropriate discount rate for ..
A mutual fund manager expects her portfolio to earn a rate of return of 8% this year. The beta of her portfolio is .8. Assume rate of return available on risk-free assets is 5% and you expect the rate of return on the market portfolio to be 10%. Calc..
When the return on equity is equal to the return on capital employed,
Please show your work. Frances bought a car for $44,500 as a business investment opportunity. She is allowed to depreciate over 10 years and take it as business tax deduction. At the end of the 6th year she sells this car for $22,000. Compute the cum..
The textbook Production company has been hit hard due to increase competition. The company analysts predict that earnings ( and dividends) will decline ( negative growth) at the rate of 5 percent annually forever. Assume that the require rate of retu..
How much money will be in the account after three years?
How much will next year’s dividend be? Calculate the market’s required rate of return.
A 7% semiannual coupon bond matures in 5 years. The bond has a face value of $1,000 and a current yield of 7.4109%. What is the bond's price? Do not round intermediate calculations
Hodgkiss Enterprises has gathered projected cash flows for two projects. At what interest rate would the company be indifferent between the two projects? Which project is better if the required return is 10.5 percent?
JJ Industries will pay a regular dividend of $0.75 per share for each of the next four years. At the end of four years, the company will also pay out a liquidating dividend. If the discount rate is 12 percent, and the current share price is $75, what..
David owns 75 percent of the stock of Smith Industries, which is operated as an S corporation. Walter owns the remaining 25 percent. - David is the driving force behind the company. It is doubtful the company could survive without David. The company ..
What would the value be if the payments occurred for 42 years? What would the value be if the payments occurred forever?
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