Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Question
Real Option Homework Thriller Land is an old fashioned amusement park based in Neverland, California. Jack Michaelson, the founder and CEO of Thriller Land, is retiring and wants to sell the park. Michaelson is offering the park for sale. Thriller Land's primary asset is the huge tract of land in the Southern California, which even if the park were closed would be worth $50,000,000. The park is on target to producing an annual cash flow of $5,000,000 in the coming year. Michaelson has estimated the firm's value as a going enterprise using the discounted cash flow (DCF) method. The DCF method forecasts future cash flows to the equity holders and discounts them to form a risk adjusted present value. Since the firm's cash flow can be well modeled as growth perpetuity, the DCF method can be viewed in this case as estimating next year's cash flow, estimating a long term growth rate and an appropriate discount rate and plugging them into the constant growth in perpetuity model: Value = Next Annual Cash Flow / (Discount Rate - Growth Rate) There is consensus that a discount rate of 15% is appropriate. The huge issue is revenue growth. It seems clear that if no competitors move into the area, the firm can continue to grow in the area of 10% per year into the future. However, if zoning laws are changed and competition moves in, the firm's long term growth rate would be 0%. Experts agree that there is a 50-50 chance that the zooming laws will be changed and therefore the firm's expected revenue growth rate is 5%. Using these figures, the discounted cash flows method generates the following estimates: DCF = $5 Million / (0.15 - 0.05) = $50 Million Thus, as would be expected in efficient markets, the value of the amusement park based on its assets (in effect, its land) is equal to the value of the amusement park as a going concern (using DCF method). Do you agree?
Firm has debt beta of 0.20 and an equity beta of 3.18. If the debt-value ratio is 42%, what is the unlevered equity beta?
Arnold purchased two rental properties 6 years ago. He actively participates in their management. During 2018, Arnold had income of $22,000.
There are a number of common tax saving methods available to most individuals and households.
O'Brien Ltd.'s outstanding bonds have a $1,000 par value, and they mature in 25 years. Their nominal annual, not semiannual yield to maturity is 9.25%, they pay interest semiannually, and they sell at a price of $1,150. What is the bond's nominal cou..
What is a potential downside to granting executives stock and restrictedstock? (hint: think diversification). How do the foreign exchange market operate? What is the difference between spot and forward exchange rates?
The meeting is usually held in the boardroom at the company’s offices but this room is unavailable. It will be necessary to make alternative arrangements.
What is the yield to maturity on the bond issue if the current market price is $829?
Joe Brown and Fred Anthony are planning to invest in a Go Green project. Calculate the market value of Renowned Cola's debt
What do you think are most pressing ethical issues for marketers today? Can firm be socially responsible and not ethical or ethical and not socially responsible
A European option gives its owner the right to exchange two shares of Stock R for a share of Stock S at the end of 9 months. The value of this option is $8.96. The continuously compounded risk-free interest rate is 9%.
What is the company's internal growth rate and what will be the new dividend payout ratio and retention ratio for the company
Savvy Supermarkets is a chain of grocery stores that is currently financed with 12.5% debt and 87.5% equity. The CEO of Savvy decides that the proportion of debt in the current capital structure is too low because investors in Savvy’s stock demand a ..
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd