What is the value of the company

Assignment Help Finance Basics
Reference no: EM132412405

Your company has an expected unlevered, after-tax cash flow for the next two years of $281,000. Then (from year 3) it will decrease to $278,400, and stay constant forever. The company also has a constant debt of $4 million. The interest rate paid by the company is 2%. The unlevered return on equity is 8% and the corporate tax rate is 13%. What is the value of the company?

Reference no: EM132412405

Questions Cloud

Who makes the majority of the profit from you work : Who makes the majority of the profit from you work? You could even look at the quarterly statements for your company and examine the disparity.
Making appropriate hedge strategy : Determine whether a forward hedge or a money market hedge would be the most appropriate hedge strategy.
Advantage of forward contracts relative to futures contracts : What is the single biggest advantage of forward contracts relative to futures contracts?
What is the return on equity for company a : The corporate tax rate is 15%, the risk free rate is 3% and the expected return on the market portfolio is 9%. What is the return on equity for Company A?
What is the value of the company : The interest rate paid by the company is 2%. The unlevered return on equity is 8% and the corporate tax rate is 13%. What is the value of the company?
What is simmons return on levered equity : The tax rate on corporate earnings is 32%. What is Simmons' return on levered equity after the debt issuance?
Adequate compensation for investment : You are considering the purchase of Crown Bakery, Inc. common stock that just paid a dividend of $19.59 per share. You expect the dividend to grow
Determining the ll after-tax cost of debt : LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is LL's after-tax cost of debt
What are the limits of patient confidentiality : What are the limits of patient confidentiality? Do you recognize situations in which a duty to warn or otherwise protect third parties might exist?

Reviews

Write a Review

Finance Basics Questions & Answers

  Examine what is the intrinsic value of the stock

Caskey Inc. is experiencing a period of growth. Dividends are expected to grow at a rate of 14.00% for the next two years and 6.00% thereafter.

  What is the return on the portfolio

You buy 1,000 shares IBM stock for $106 and 500 shares of Starbucks stock for $87. IBM stock goes down in value to $91/share.

  Determine the values of finance companies

Evaluate how finance companies are exposed to various forms of risk. Identify the factors that determine the values of finance companies. What are the intrinsic and market risk factors and what are their affect on investment companies' performance..

  Compute the pv of the bond at period 1

Bond valuation of case 3: r d has increased from 10% to 12% at period 1. The initial who time to maturity was 15 year. INT=$100 and M=$1000. Compute the PV of the bond at period 1.

  Determine types of budgets that you think would be effective

As a practice manager, determine two types of budgets that you think would be most effective for managing the practice's income and expenses. Justify your response.

  What is npv of the project with the lower cost of innovation

You are able to lower cost of innovation to $200,000 but it will take more time to do the work. This means higher profits and cash flows will be delayed by one year. The investment of $200,000 will occur today. Which option is better ($200,000 wit..

  Building a factory and purchase

Question #1: Should the following be included in this company's capital budget cash flow projections? Why or why not?

  Various types of mutual funds to their investments goals

As previously noted, the Brocks have some of their investment portfolio in conservative stocks. These equities have had very slow growth while regularly paying a small dividend.

  The bondholders receive a distribution of 150 per bond at

you buy a very risky bond that promises a 9.5 coupon and return of the 1000 principal in 10 years. you pay only 500 for

  Penalties or reduce punishment for large corporations

Should the criminal justice system be allowed to use the "collateral consequences" rule to mitigate penalties or reduce punishment for large corporations

  Compute the break-even point in dollars

Presented below are variable costing income statements for Diggs Company and Doggs Company. They are in the same industry, with the same net incomes.

  What are the reasons why some oppose cycle theory

What are the reasons why some oppose cycle theory? - How do the supporters of cycle theory respond to these criticisms?

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