Expected net operating profit after taxes

Assignment Help Financial Management
Reference no: EM131628479

Grey Fox Aviation Company has an expected net operating profit after taxes, EBIT x (1 – Tax rate), of $13,800,000 in the coming year. In addition, the firm is expected to have net capital expenditures of $2,070,000, and the firm's net operating working capital (NOWC) is expected to increase by $25,000. Grey Fox expects to generate$11,705,000 in free cash flow (FCF) over the next year (rounded to the nearest whole dollar). Grey Fox ’s FCFs are expected to grow at a constant rate of 3.12% per year in the future. The market values of Grey Fox ’s outstanding debt and preferred stock are $84,411,058 and $46,895,032, respectively. Grey Fox Aviation Company has 375,000 shares of common stock outstanding, and its weighted average cost of capital (WACC) equals 9.36%. Using the preceding information and the FCF you calculated in the previous question, calculate the appropriate values in this table (again, rounded to the nearest whole dollar).

Reference no: EM131628479

Questions Cloud

Determine the price of the option today : Consider a European call with an exercise price of $50 on a stock priced at $60. Determine the price of the option today (Using Excel)
What would be the approximate expected price of stock : What would be the approximate expected price of a stock when dividends are expected to grow at a 25% rate for 3 years,
What is yield to maturity for a bond with annual coupon : What is the yield to maturity for a bond with an annual coupon of 10% that has 8 years until maturity and sells for $1,000?
What is the yield to maturity of a bond : What is the yield to maturity of a bond with the following characteristics?
Expected net operating profit after taxes : Grey Fox Aviation Company has an expected net operating profit after taxes, EBIT x (1 – Tax rate), of $13,800,000 in the coming year.
What is the effective annual rate of interest : What is the effective annual rate of interest?
Considering two mutually exclusive projects : Lithium, Inc. is considering two mutually exclusive projects, A and B. Lithium, Inc.'s required rate of return for these projects is 10%.
What is the pv of the receiver contract : What is the PV of the Quarterback contract? What is the PV of the receiver’s contract?
What is incremental savings of buying the valves : Howell Corporation produces an executive jet for which it currently manufactures a fuel valve. What is the incremental savings of buying the valves?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the project year zero net cash flow

Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.43 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $1,990,000 in annual sale..

  Expansion project-requires an initial fixed asset investment

Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.64 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be w..

  According to the npv rule-considering making movie

You are considering making a movie. What is the payback period of this investment? According to the NPV rule, should you make this movie?

  What will the insurance company pay for this accident

Marika Katz bought a new Blazer and has insurance coverage of 25/50/25 with $200 deductible for collision. Driving up to her summer home one evening, Marika hit a parked car and injured the couple inside. What will the insurance company pay for this ..

  Earnings before interest and taxes is calculated

Earnings before interest and taxes is calculated as

  Calculate the debt yield ratio

If the expected purchase price of the property is $1,250,000 and you are planning on making a 20% down payment, calculate the debt yield ratio.

  What is new degree of operating leverage

A proposed project has fixed costs of $39,000 per year. The operating cash flow at 6,000 units is $68,000. What is the new degree of operating leverage?

  What is the short-term and long-term financial impact

In setting up a union how you anyone go a bout getting this information: Financial Statements: What financial statements will you utilize in making your proposal, and how will you use these statements? Proposal Impact: What impact will your proposal ..

  What would the risk-free rate have to be for the two stocks

Stock Y has a beta of .98 and an expected return of 10.30 percent. Stock Z has a beta of .80 and an expected return of 9 percent. What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other?

  Preferred dividend increase equal the common dividend

(Preferred dividend) a company has an outstanding issue of $100.00 par value per stock. it recently declared at $7.00 per par share dividend on its common stock. how much will the company pay in annual per-share preferred dividends if the preferred i..

  What is your total carrying cost and restocking cost

Your business is to sell automotive parts. You sell 2500 automotive parts per week to wholesale clients and then reorder another 2500 automotive parts. Assuming you have a relevant carrying cost per automobile parts of $5 and a fixed order cost of $5..

  What is counts unlevered beta

Counts Accounting has a beta of 1.50. The tax rate is 35%, and Counts is financed with 40% debt. What is Counts' unlevered beta? Ethier Enterprise has an unlevered beta of 1.05. Ethier is financed with 45% debt and has a levered beta of 1.15. If the ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd