Find the value of kendras operations

Assignment Help Financial Management
Reference no: EM131965631

Kendra Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000 for the next 2 years, respectively; after the second year, FCF is expected to grow at a constant rate of 9%. The company's weighted average cost of capital is 14%.

1. What is the terminal, or horizon, value of operations?

(Hint: Find the value of all free cash flows beyond Year 2 discounted back to Year 2.) Round your answer to the nearest cent. $

2. Calculate the value of Kendra's operations.

Round your answer to the nearest cent. Do not round intermediate calculations.

Reference no: EM131965631

Questions Cloud

Determine amount of gain or loss that would be recognized : Determine the amount of gain or loss that would be recognized under IFRS. Prepare the related journal entry.
Prepare the working paper eliminating entries needed : Prepare the working paper eliminating entries needed to consolidate ProLock and Senyo at the date of acquisition.
Show the step-by-step execution of dijkastra : Show the step-by-step execution of Dijkastra's algorithm to find the shortest path from node a to all other nodes.
What is the projects internal rate of return : What is the project's internal rate of return? If the cost of capital is 14.5% would you accept the project? What is the project's profitability index?
Find the value of kendras operations : What is the terminal, or horizon, value of operations?Calculate the value of Kendra's operations.
Find the shortest path from node a to all other nodes : Show the step-by-step execution of Dijkastra's algorithm to find the shortest path from node a to all other nodes.
What was the amount of gain or loss estimate change caused : The projected benefit obligation was $180 million at the beginning of the year. What was the amount of the gain or loss the estimate change caused?
Process group in project management life cycle : The last process group in project management life cycle is "close". Please discuss the following two ways of closing a project:
Explain what would happen to the bond price 5 years from now : Kemco Manufacturing Co. has a bond of $1000 par value outstanding. It pays interest annually and carries an annual coupon rate of 8%.

Reviews

Write a Review

Financial Management Questions & Answers

  Public corporation from the private corporation

What differentiates the public corporation from the private corporation? How does the not-for-profit corporation differ in purpose and structure from the for-profit? What is the primary characteristic of the closely held corporation?

  Valuation of constant growth stock

If its required return is 14%, what is the stock's expected price 1 years from today?

  Calculate the net payouts for a collar strategy

calculate the net payouts for a collar strategy for each different scenario.

  The amount left for distribution to general unsecured credit

Three general unsecured creditors are owed $45,000 as follows: Easy Does It Rentals, $15,000; Make Me a Deal Furniture, $5,000; and TV’s r Us, $25,000. After all other creditors are paid, the amount left for distribution to general unsecured creditor..

  Annual payment corporate bond has market price

A 12-year annual payment corporate bond has a market price of $925. It pays annual interest of $60 and its required rate of return is 7 percent.

  What is the value of your investment

If this fund sells at a 10 percent discount to NAV the day after the initial public offering, what is the value of your investment?

  Receivables investment-what is the days sale outstanding

Snider Industries sells on terms of 3/10, net 30. Total sales for the year are $1,516,000. Thirty percent of the customers pay on the 10th day and take discounts; the other 70% pay, on average, 48 days after their purchases. Assume 365 days in year f..

  What is the process of target costing

How would a manager use economic theory to maximize profit price for a service or product? What is the process of target costing? How is target costing calculated?

  What will be the cost savings in 2013

suming these costs increase with inflation, and the inflation rate is 4 percent, what will be the cost savings in 2013?

  Document supersedes all oral promises relating to the sale

In a transaction for the sale of an auto painting facility, Bright Auto Colors Company tells Custom Cars Corporation that the paints and other supplies on-site are included. The contract says nothing about the supplies on-site, but does state, “This ..

  Behaviorally anchored rating scale to employee compensation

What organizations can do to prevent ethical and legal challenges that might arise from linking behaviorally anchored rating scale to employee compensation.

  Corporate bonds-what is the current price of the bond

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 15 years to maturity, and a coupon r..

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