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Icarus Airlines is proposing to go public, and you have been given the task of estimaing the vlaue of tis equity. Management plans to maintain debt at 32% of the company's present value, and you believe that at this capital strucutre the company's debtholders will demand a return of 6% and stockholders will require 13%. The company is forecasting that next year's operating cash flow (depreciation plus profit after tax at 40%) will be $70 million and that investment expenditures will be $32 million. Thereafter, operating cash flows and investment expenditures are forecast to grow in perpetuity by 4% a year.
a. what is the total value of Icarus? (Do not round intermediate calcualtions. Enter your answer in millions rounded to the nearset whole dollar amount)
total value $____________million
b. what is the value of the company's equity? (Do not round intermediate calculations. Enter your answer in millions rounded to 1decimal place)
company's equity $____________million
Bauer software''s current balance sheet show total common equity of $ 5,125,000. The company has 530,000 shares of stock outstanding, and they sell at a price of $ 27.50 per share - By how much do the firm''s market and book value per share differ..
Pick a country you wish to focus on. Compare and contrast any (three) of the following topics relating to anything we learned this term. (credit scores, credit cards, cars, mortgages, mutual funds, student loans, stocks, retirement)
The investor takes $200,000 loan (at time zero) to purchase the machine at 6% interest rate. Loan has to be repaid by constant annual payments from year 1 to year 5 (5 payments). Calculate interest and principle for the payments, BTCF, ATCF, NPV and ..
Are all of the items listed below reasons why having a will is important? Which items will go through probate? Which property ownership could he sell without the consent of a co-owner?
A Japanese company has a bond outstanding that sells for 92 percent of its ¥100,000 par value. The bond has a coupon rate of 5.9 percent paid annually and matures in 15 years. What is the yield to maturity of this bond?
Internal Rate of Return and Net Present Value
On January 1, 2016, Dreamworld Co. began construction of a new warehouse. The building was finished and ready for use on September 30, 2017. The average accumulated expenditures for 2017 by the end of the construction period was:
Haskell Corp. is comparing two different capital structures. Plan I would result in 13,000 shares of stock and $100,000 in debt. Plan II would result in 10,500 shares of stock and $150,000 in debt. The interest rate on the debt is 10 percent. a. Igno..
How would you set up a cost-benefit analysis of a program to reduce air pollution in a city? Indicate the items you would include as costs and benefits, and discuss the problems encountered in measuring these benefits and costs.
Using the P/E ratio approach to valuation, calculate the value of a share of stock under the following conditions: The investor's required rate of return is 13 percent. the expected level of earnings at the end of this year is $4. Now show that you g..
Suburban Hospital has two options in how to purchase some EDP equipment with a list price of $5m. Option one is a 15% reduction in the price of the equipment but the hospital has to pay the full amount at the time of purchase. What if the opportunity..
A stock has had returns of −19.6 percent, 29.6 percent, 31.2 percent, −10.7 percent, 35.4 percent, and 27.6 percent over the last six years. What are the arithmetic and geometric returns for the stock?
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