Income before interest-depreciation and taxes

Assignment Help Financial Management

Reference no: EM13880785

The MoMi Corporation’s income before interest, depreciation and taxes, was $3.2 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 20% of pretax cash flow each year. The tax rate is 35%. Depreciation was $380,000 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.)

Reference no: EM13880785

Questions Cloud

Devise a benchmarking review for anthonys orchard : Conduct a gap analysis for Anthonys Orchard and devise a benchmarking review for Anthony's Orchard. To do this, discuss recommended strategies and measures that will be useful to measure progress towards the objective in your gap analysis.

The process of creating a new business structure : the process of creating a new business structure and have to choose between a personal service corporation and one that is closely held.

What is the yield to call for this bond : Fooling Company has a 12.4 percent callable bond outstanding on the market with 25 years to maturity, call protection for the next 10 years, and a call premium of $100. What is the yield to call (YTC) for this bond if the current price is 106 percent..

Explore the effect of variations : Explore the effect of variations in q and h by plotting temperature distributions, T(r), for a range of parameter values. Suggest an envelope of acceptable operating conditions.

Income before interest-depreciation and taxes : The MoMi Corporation’s income before interest, depreciation and taxes, was $3.2 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 20% of pre..

What is the current bond price : Great Wall Pizzeria issued 12-year bonds one year ago at a coupon rate of 6.9 percent. If the YTM on these bonds is 9.1 percent, what is the current bond price?

What is the supply curve of the typical supplier : Suppose that the large firm sets the market price at some level P. Each supplier acts competitively (i.e., sets output to maximize profit, given P). What is the supply curve of the typical supplier? Of the industry?

Markets expectation of the growth rate of MBI dividends : A) Computer stocks currently provide an expected rate of return of 14%. MBI, a large computer company, will pay a year-end dividend of $1 per share. If the stock is selling at $50 per share, what must be the market's expectation of the growth rate of..

Explain the potential value of a bsc to anthonys orchard : Explain the potential value of a BSC to Anthonys Orchard. Describe specific ways that the introduction of a BSC can contribute to this organisation.

User Account

All Pages