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Question: Residual Earnings Valuation and Accounting Methods (Hard) Refer back to the valuation. In that proforma, an analyst forecast $388 million of earnings for 2013 on a book value at the end of 2012 of $4,310 million, that is, a return on common equity of 9 percent. The forecasts were made at the end of 2012 based on preliminary reports from the firm. When the final report was published, however, the analyst discovered that the firm had decided to write-down its inventory at the end of2012 by $114 million (following the lower of-cost-or-market rule). As this was inventory that the analyst forecasted would be sold in 2013 (and thus the impairment affects cost of goods sold for that year), the analyst revised her earnings forecast for 2013. For questions (a) and (b), ignore any effect of taxes.
a. What is the revised earnings forecast for 2013 as a result of the inventory impairment assuming no change in the sales forecast? What is the revised forecast of return on common equity (ROCE) for 2013?
b. Show that the revision in the forecast of2013 earnings does not change the valuation of the equity.
c. Recognize, now, that the firm's income tax rate is 35 percent. Do your answers to questions (a) and (b) change?
assume that you deposit 1631 into an account that pays 10 percent per annum. how much money will be in the account 21
1. You will he paying S 10.000 a year in tuition expenses at the end of the next two years. Bonds currently yield SC. (LO 11-2)
However, the treasurer wants to know the money market yield on this instrument to make it comparable to the T-Bills and CDs she has already bought. If the term of the instrument is 90 days, what are the bond-equivalent and discount yields on this ..
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What is the project's net present value? While Kim expects the cash flows to be $3 million a year, it recognizes that he cash flows could, in fact, be much higher or lower, depending on whether he Korean government imposes a large hotel tax.
What is the Reinforcement Theory? What is the Social Learning Theory? Other Theories?
In addition to understanding how costs are tied to staffing, it is also important to know how revenue and profit are tied to staffing.In a managerial role, you will often come up the financial issue of growing business while maintaining costs.Pretend..
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you are 25 years old and inherit 65000 from your grandmother. if you wish to purchase a 100000 yacht to celebrate your
If the returns required by investors are 10 percent, 11 percent, and 15 percent for the debt, preferred stock, and common stock, respectively, what is Capital's after-tax WACC? Assume that the firm's marginal tax rate is 40 percent.
Explain how this approach reduces moral hazard compared to a rescue that protects both creditors and equity holders.
Write a 1600 word summary and evaluation of any single one of the three classic articles on international finance (listed in the Delivery and Resources section).
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