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Question - A company has a market value of equity of $20,000,000, and a market value of debt of $10,000,000. Further, it has 1,000,000 shares outstanding. Assume the beta of the equity is 1.5 and YTM of existing debt of 3.5%. The market risk premium is 6%, and the risk-free rate is 2%. Assume the marginal tax rate is 30%.
You estimate the FCFF for the next five years:
Year 1 $2,100,000
Year 2 $2,200,000
Year 3 $2,300,000
Year 4 $2,400,000
Year 5 $2,500,000
After year five the FCFF will increase at a constant rate of 2%, in line with inflation estimates. (This means Year 6 cash flows will be 2% greater than year 5 cash flows).
Required - What is expected return on equity, according to CAPM? what is D/E ratio? What is the WACC? What is the PV of the company?
Grab Manufacturing Co. purchased a 10-ton draw press at a cost of $180,000 with terms of 5/15, n/45. Compute the capitalized cost of the 10-ton draw press
Find What is the particular growth rate for the next year, at which company will need zero eternal financing (EFN = 0)? What is the internal growth rate?
Smathers and Branson handcrafts needlepoint belts and other products. Company founders, Peter Smathers Carter and Austin Branson stress the importance of planning and budgeting. How can budgeting help the owners efficiently develop and operate their ..
jordan the owner of unique sinks realizes that if he withdraws the full amount of dividend and if the slump in housing
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If Dave decided to pay the loan off immediately after he made the 12th monthly payment, how much would his payoff amount be
You are to explore the annual report disclosures for one of the NZX 50companies for 2012. You are required to choose the company. The annual reports areavailable online.
evaluation of criteria for internal control system.for each of these five separate cases identify the principle of
Prepare Cheyenne's journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment
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Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 1 2 3 4 5 FCF -$22.34 $38.4 $43.6 $52.4 $57 The weighted average cost of capital is 10%, and the FCFs are expected to continue growing at a 3% rate after Year 5. The f..
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