What is sparkling worth today

Assignment Help Financial Management
Reference no: EM131506546

Sparkling Water, Inc., expects to sell 2.90 million bottles of drinking water each year in perpetuity. This year each bottle will sell for $1.75 in real terms and will cost $1.00 in real terms. Sales income and costs occur at year-end. Revenues will rise at a real rate of 3 percent annually, while real costs will rise at a real rate of 2 percent annually. The real discount rate is 10 percent. The corporate tax rate is 35 percent.

What is Sparkling worth today? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, i.e. 1, 234, 567.) Value of the firm $ ____

Reference no: EM131506546

Questions Cloud

All-equity financed firm : Benchmark Metrics Inc. (BMI), an all-equity financed firm, reported EPS of $ 4.31 in 2013.
Considering the replacement of old machine : automotive company that is considering the replacement of an old machine that has a current book value of $7,000 and a market value of $9,000.
Money market hedging with bid-ask spreads : Money Market Hedging with Bid-Ask Spreads. What are your receivables in dollars if you hedge using money market hedging?
The expected future spot exchange rate : The expected future spot exchange rate in one year is $/REAL. Brazilian Real should (appreciate/depreciate) in value by % relative to $.
What is sparkling worth today : Sparkling Water, Inc., expects to sell 2.90 million bottles of drinking water each year in perpetuity. What is Sparkling worth today?
What is the firm value under each alternative : M&M Pies has no debt in its capital structure. What is the firm value under each alternative?
What is equivalent annual cost : The real cost of capital is 5%, and the college pays no taxes. What is the equivalent annual cost?
The contribution margin is equal to sales minus fixed costs : At the accounting break-even level, the pretax profit is equal to the aftertax profit. The contribution margin is equal to sales minus fixed costs.
What will be the amount of that withdrawal : Anna has $38,654 in a savings account that pays 2.3 percent interest. what will be the amount of that withdrawal?

Reviews

Write a Review

Financial Management Questions & Answers

  Determine the value of the european put

A stock is now selling for $100. Each month it will either increase or decrease in value by 10% (u = 1.1, d = 0.9). The riskless rate with annual compounding is 12.682503% per year. Note that 1.12682503 = 1.0112. Draw the tree of values for the stock..

  What is dividend yield and what is the intrinsic value

ABC Corp. has just paid a dividend of $0.26. ABC has an annual required return of 12%. If dividends are annual and expected to be constant, what is the intrinsic value (fair price) of ABC stock? What is ABC's dividend yield? A different analyst think..

  Cost-effective method of mining gold is sulphuric acid

After discovering a new gold vein in the Colorado Mountains, CTT Mining Corporation must decide whether to go ahead and develop the deposit. The most cost-effective method of mining gold is sulphuric acid extraction, a process that results in environ..

  What are real exchange rates between dollar and yen

If the exchange rates are $1.50 = £1 and ¥100 = $1, what are the real exchange rates between the dollar and the yen and the dollar and the pound?

  Systematic risk increases-factors remaining constant

IBM’s stock is currently selling at $ 11.44. This year the firm had earnings per share of $2.80 and the current dividend is $ 0.68. Earnings are expected to grow 7% a year in the foreseeable future. The risk free rate is 10 percent and the expected m..

  Enterprises originally sold bonds

Enterprises originally sold bonds in 2011 with a 15 year maturity, $1000 par, 6% coupon paying annual interest. It is now 2015 and 4 years later. Bonds of similar risk selling at par know have a 5% coupon rate. What price would bond investors be will..

  Replacement analysis-replacing the wood steamer

The Gilbert Instrument Corporation is considering replacing the wood steamer it currently uses to shape guitar sides. The steamer, purchased just 2 years ago, is being depreciated on a straight-line basis and has 6 years of remaining life.

  What is the intrinsic value of this preferred stock

Federated Holdings recently issued $90 par-value preferred stock that pays a 7% dividend rate per year.- What is the intrinsic value of this preferred stock?

  Determine the average investment in accounts receivable

Pretty Lady Cosmetic Products has an average production process time of forty days. Finished goods are kept on hand for an average of fifteen days before they are sold. Determine the average investment in accounts receivable, inventories, and account..

  Increased regulatory capital requirements

Explain why increased regulatory capital requirements lead to a greater consolidation of banking firms via mergers and acquisitions.

  Activities be performed by various marketing institutions

The marketing process does not take place automatically. It requires that certain marketing functions or activities be performed by various marketing institutions - and by consumers themselves. Discussion Name a product for which all eight marketing ..

  Explain the likely interest rate conditions

Explain the likely interest rate conditions that would cause these premiums. Does this ensure that covered interest arbitrage is worthwhile?

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