What is the terminal or horizon-value of operations

Assignment Help Financial Management
Reference no: EM131947905

Kendra Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000 for the next 2 years, respectively; after the second year, FCF is expected to grow at a constant rate of 9%. The company's weighted average cost of capital is 15%.

A) What is the terminal, or horizon, value of operations? (Hint: Find the value of all free cash flows beyond Year 2 discounted back to Year 2.) Round your answer to the nearest cent.

B) Calculate the value of Kendra's operations. Round your answer to the nearest cent. Do not round intermediate calculations.

Reference no: EM131947905

Questions Cloud

Explain the benefits and the opportunity that a more diverse : The business environment is continuously evolving with the integration of new management trends developed to create opportunity and respond to challenges.
A brief overview of your strategic communications plan : Review at least two of your peers' Strategic Communications Plan. Provide feedback.
What amount of equity and what amount of debt : What amount of equity and what amount of debt would you need to issue to cover the net new financing in order to keep your? debt-equity ratio? constant?
What aspects of the job or activity made it motivational : What aspects of the job or activity made it motivational for you? What type, or types, of motivational techniques were used in that job or activity?
What is the terminal or horizon-value of operations : What is the terminal, or horizon, value of operations? Calculate the value of Kendra's operations
Create a logical campus network for slugworth candies : IT 1080C Computer Networking Final Project: Slugworth Candies, LLC - create a logical2 campus network for Slugworth Candies, LLC. Each local area network
Provide one example of the equity theory of motivation : What level(s) of Maslow's Hierarchy of Needs is the person exhibiting? Suggest two and please explain.
Equilibrium with required return equal to expected return : What is the value of the stock today (assume the market is in equilibrium with the required return equal to the expected return)?
What yen-euro price will eliminate triangular arbitrage : What yen/euro price will eliminate the triangular arbitrage opportunity?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the payback period of project

What is the payback period of a project with a $ 40 comma 200 initial investment and expected net cash flows of $ 12 comma 500 ?,

  Year-to-date-what is portfolio return

Year-to-date-If you have a portfolio made up of 40 percent Yum Brands, 35 percent Raytheon, and 25 percent Coca-Cola, what is your portfolio return?

  What will be optimal cash replenishment level

Rose Axels faces a smooth annual demand for cash of $5.12 million, incurs transaction costs of $273 every time the company sells marketable securities, and can earn 4.1 percent on its marketable securities. What will be its optimal cash replenishment..

  Requires an initial investment-replaced at maturity

Machine A requires an initial investment of $ 5,000, has a 10 year life expectancy, and is expected to reduce the company's operating costs by $ 1,200. annually in real terms. This machine would have no sales value at the end of its useful life. The ..

  What will be the balance sheet impact of the dividend

XYZ Corporation has announced a quarterly $1.50 dividend. Its current market price is $75 per share. The stock will go ex-dividend tomorrow. Ignoring tax effects what will it sell for tomorrow? What will be the balance sheet impact of the dividend if..

  The maintenance costs for a certain machine

The maintenance costs for a certain machine are $1,600.00 per year for the first 6 years and $2,400.00 per year for the next 7 years. At a interest rate of 6% per year, the present worth of the maintenance is closest to? Show work using factors in th..

  Prepare a business report for the board of directors

Accounting and Decision Making - Prepare a business report for the Board of Directors providing analysis and business advice

  Purchase zero coupon bond with a face value

Suppose you purchase a zero coupon bond with a face value of $1,000, maturing in 22 years, for $215.75. Zero coupon bonds pay the investor the face value on the maturity date. What is the implicit interest in the first year of the bond's life?

  What is expected return if market return

what is expected return if market return is 13%, and R F= 7%

  Does not take any action about exchange rate

Boeing Company sold some aircrafts to Qantas Airlines for A$500 million. Payment is due in 3 months. Although the current exchange rate is $0.60/A$, the three months’ rate is unpredictable. The three-month forward rate is $0.70/A$.. Doesn’t take any ..

  Considering a property-what is present value of investment

You are considering a property that is leased for 4 years. As the lessor you would recieve the following cash flows (at the end of each year): $17,800 in Year 1, $19,000 in Year 2, $12,500 in Year 3, and $10,000 in Year 4. At the end of the period yo..

  Four-year project to improve its production efficiency

Purple Haze Machine Shop is considering a four-year project to improve its production efficiency. Calculate the NPV of this project

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