Value on the ownership position in briarwood hospital

Assignment Help Financial Management
Reference no: EM13502347

Assume that you have been asked to place a value on the ownership position in Briarwood Hospital. Its projected profit and loss statements and equity reinvestment (asset) requirements are shown below (in millions):

2005 2006 2007 2008 2009Net revenues $225.0 $240.0 $250.0 $260.0 $275.0Cash expenses 200.0 205.0 210.0 215.0 225.0Depreciation 11.0 12.0 13.0 14.0 15.0Earnings before interest and taxes (EBIT) $ 14.0 $ 23.0 $ 27.0 $ 31.0 $ 35.0Interest 8.0 9.0 9.0 10.0 10.0Earnings before taxes (EBT) $ 6.0 $ 14.0 $ 18.0 $ 21.0 $ 25.0Taxes (40 percent) 2.4 5.6 7.2 8.4 10.0

Net profit $ 3.6 $ 8.4 $ 10.8 $ 12.6 $ 15.0

Asset requirements $ 6.0 $ 6.0 $ 6.0 $ 6.0 $ 6.0

Briarwood's cost of equity is 16 percent. The best estimate for Briarwood's long-term growth rate is 4 percent.a. What is the equity value of the hospital?b. Suppose that the expected long-term growth rate was 6 percent. What impact would this change have on the equity value of the business? What if the growth rate were only 2 percent?

Reference no: EM13502347

Questions Cloud

How does naomi klein define disaster capitalism : 1) How does Naomi Klein define disaster capitalism? What is the shock doctrine? And, what is the government’s role in a “disaster capitalism” economy? Provide at least three historical examples.
Compare as well as contrast solid-phase dna synthesis : Compare and contrast solid-phase DNA synthesis with enzyme-catalyzed DNA synthesis. Please separately describe the similarities and differences between the two.
Describe the financial statement impact of the error : In each of the following situations, determine if the appropriate action was taken. If not, describe the financial statement impact of the error.
Determine the combined mass of this canoe and rider : Two canoes are tied together and traveling down a river with the current. Spotting a waterfall, the two canoeists cut the rope, What is the combined mass of this canoe and rider
Value on the ownership position in briarwood hospital : What impact would change have on the equity value of the business and what if the growth rate were only 2 percent?
Explain the molar equilibrium constant is found : You place 25 moles of a monomer in a flask. It equilibrates to form a dimer by the following reaction. The molar equilibrium constant is found to be 3.5. monomer ( ) dimer or restated 2A ( )A2, What are the concentrations of the monomer and dimer i..
Strategic plan : Strategic plan
What are the nal and irr of the lease : Interpret each value.b. Assume now that the bank loan would cost 15 percent, but all other facts remain the same. What is the new NAL? The new IRR?
Explain what is the ph of sodium phenolate : What is the pH of 0.185M sodium phenolate (C6H5ONa), the sodium salt of phenol (Ka= 1.0 X 10-10)

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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