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You are going to value Lauryn’s Doll Co. using the FCF model. After consulting various sources, you find that Lauryn has a reported equity beta of 1.5, a debt-to-equity ratio of .6, and a tax rate of 30 percent. Assume a risk-free rate of 5 percent and a market risk premium of 9 percent. Lauryn’s Doll Co. had EBIT last year of $48 million, which is net of a depreciation expense of $4.8 million. In addition, Lauryn made $5.5 million in capital expenditures and increased net working capital by $1.8 million. Assume her FCF is expected to grow at a rate of 3 percent into perpetuity. What is the value of the firm? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. Omit the "$" sign in your response.)
Your employer has agreed to make quarterly payments of $400 each into a trust account to fund your early retirement. The first payment will be made 3 months from now, and payments will stop after 20 years when you retire. The funds will be invested a..
The forecasted returns of a stock based on different economic outlook are as follows: Calculate the expected return of the stock.
You have an investment oppurtunity that requires an initial investment of $2,600 today and will pay $5,000 in one year. What is the Rate of return of the oppurtunity?
Assume? Colgate-Palmolive Company has just paid an annual dividend of $ 0.97 . Analysts are predicting an 11.2 % per year growth rate in earnings over the next five years. After? that, Colgate's earnings are expected to grow at the current industry a..
Revenue $3 million COGS 40% of revenue Operating Expenses $500,000. If their retained earning balance was $450,000 last year and $912,000 how much did they pay in dividends? What is the yield to maturity for a bond with the following attributes? 12 y..
John has established a $10,000,000 private foundation. He has a large family including a spouse, three brothers, four adult children, and eight grandchildren (two of whom are adults). The board of the foundation currently consists of him and two of h..
Consider two mutually exclusive projects with the following cash flows: Project S is a 4 year project with initial (time 0) cash outflow of 3000 and time 1 through 4 cash inflows of 1500, 1200, 800 and 300 respectively. Project L is a 4 year project ..
Global gum company (GGC) has decided to issue $150 million in common stock to raise funds to finance future growth. GGC's stock currently sells for $25 per share. How many shares does GGC plan to issue? If flotation costs are 8 percent, how much of t..
Smith lends Jones 1000 on January 1, 2007 on the condition that Jones repay 100 on January 1, 2008, and 1000 on January 1, 2009. Let j be the 6-month rate earned on Smith's net transaction. Calculate j. (hint: PV of payments coming in must equal amou..
Project K costs $40,000, its expected cash inflows are $14,000 per year for 10 years, and its WACC is 12%. What is the project's NPV? Round your answer to the nearest cent.
Which of the following are included in the terminal cash flow? Recapture of any working capital increase included in the initial outlay The Expected salvage value of the asset any tax payments or receipts associated with the salvage value of the asse..
Assuming a risk-free rate of 8 percent and a market return of 12 percent, would a wise investor acquire a security with a Beta of 1.5 and a rate of return of 14 percent given the facts above? please show work and explain
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