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In the face of disappointing earnings results and increasingly assertive institutional stockholders, Eastman Kodak was considering the sale of its health division which had an EBIT of $560 million in its most recent year from revenues of $5285 billion. The firm’s expected growth rate is expected to be 6% for the next 5 years and fall to 2% thereafter. Capital expenditure in the health division was $420 million last year and depreciation was $350 million. Both are expected to grow at 4% in the long run. Working capital requirements are 10% of sales. The average equity beta of companies competing with Eastman Kodak’s health division was 1.15. Eastman Kodak’s health division has a debt ratio of .20 and a debt cost of 7.5%. The company has a tax rate of .40 and the T-Bond rate is 7%. a. Estimate the division’s WACC. b. Estimate the division’s value using the DCF approach. Find a merger from this year. Discuss the type of merger, the motivation for the merger, potential synergies for the merger.
Scatter Diagrams and High-Low Cost Estimation From April 1 through October 31, Will County Highway Department hires temporary employees to mow and clean the right-of-way along county roads. What factors might have caused the difference in the equatio..
Based on the maturity of the financial instrument, which above items belong to the money market? Which items are in the capital market?
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Common stock value: Constant growth The common stock of Denis and Denis
Cash was pulled from retained earnings to cover the $21,381,552 difference between the plant purchase and bond issue.
C&FS Corporation just paid its annual dividend and the next dividend will be $2 per share.
Suppose you have insurance agent offers you a policy that will provide you with a yearly income of $50,000 in 30 years. What is the comparable salary today, assuming an inflation rate of 6%? Show all work.
One-year Treasury bills currently earn 2.75 percent. You expect that one year from now, 1-year Treasury bill rates will increase to 3.25 percent and that two years from now, 1-year Treasury bill rates will increase to 3.65 percent. If the unbiased ex..
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Assume that you have a company and need to evaluate two alternatives, an automatic machine (AM) and a manual machine (MM). Capital investment for these AM and MM are $23,000 and $8,000, respectively. The salvage values for AM and MM are $4,000 and $0..
Despite the crash of 2008 and 2009, real estate remains a solid investment over time. Why might this be the case? What is it about real estate that makes it a good investment? What kinds of real estate investment vehicles exist
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