Reference no: EM132746077
Question - Nick Frost would like to value Automaton, Inc. using the discounted cash flow (DCF) method.
He forecasts Free Cash Flows (FCFs) of $135 million, $145 million, $146 million, respectively for years 1, 2, and 3. After year 3, he assumes FCFs will increase by 2 percent to perpetuity.
Nick gathers the information below (his "input variables") to compute Automaton's cost of equity, debt, and enterprise value.
Cost of Equity
Risk-Free-Rate = 3 percent
Beta = 1.03
Return of Market Portfolio (S&P 500) = 7 percent
Debt Financing
Debt to Equity Ratio = 45 percent
Market Value of Zero-Coupon Bonds = $100 million or 75 percent of par value
Maturity of Zero-Coupon Bonds = 15 years
Tax Rate = 35%
Based on Nick's input variables, what is Automaton's Cost of Equity using CAPM?
|
What would be the amount of the gain or loss on the sale
: On January 2, 2020, ABC sold 7,000 shares of 123 on the open market for $57,750. What would be the amount of the gain or loss on the sale
|
|
IT Strategy Concerns and Effective Management
: From the first e-Activity, analyze the process for developing an IT budget within a health care organization, and select one (1) aspect of the budgeting process
|
|
Perform earned value analysis
: An artificial intelligence project is scheduled for 3 years. There are six different teams working on five major functional areas. Some teams are ahead
|
|
What pro forma balance sheet reflects the impact of company
: What the pro forma balance sheet reflects the impact of a company's strategic plan on its? revenue and expenses. / revenue and expenses
|
|
What is Automaton Cost of Equity using CAPM
: Market Value of Zero-Coupon Bonds = $100 million or 75 percent of par value. Based on Nick's input variables, what is Automaton's Cost of Equity using CAPM
|
|
What is the purpose of a probationary period
: In the first few months of your new job, you will be in a probationary period where your employer will be assessing your performance and your suitability for th
|
|
Estimate the monthly cash collections for august
: Estimate the monthly cash collections for August. Water sales during June are estimated at $3,000,000 and remain the same in July and August.
|
|
Emerging markets affect domestic market
: Emerging markets affect the domestic market in America and its interaction with the global markets. Define what emerging market is from a domestic perspective.
|
|
Discuss the scheduling decisions
: Discuss the scheduling decisions in terms of the types of resources to be scheduled and the associated customers or jobs scheduled.
|