What is the value of this business at a discount rate

Assignment Help Financial Management
Reference no: EM131014089

TH Manufacturers expects to generate cash flows of $129,600 for the next two years. At the end of the two years the business will be sold for an estimated $3.2 million. What is the value of this business at a discount rate of 14 percent?

Reference no: EM131014089

Questions Cloud

Take for the couple to triple their salary in real dollars : A couple will retire in 50 years; they plan to spend about $30,000 a year in retirement, which should last about 25 years. They believe that they can earn 8% nominal interest on retirement savings, and the couple realizes that the annual inflation ra..
Business will be worthless : Marko, Inc. is considering the purchase of ABC Co. Marko believes that ABC Co. can generate cash flows of $9,953, $6,030, and $13,798 over the next three years, respectively. After that time, they feel the business will be worthless. Marko has determ..
What is the present value of perpetuity : What is the present value (as of month 0) of a perpetuity that pays $200 every quarter forever? The discount rate quoted on an APR basis is 10%, and the first payment will be made at the end of the year (i.e., quarter 4).
Calculate how a market trader : Assuming the following? quotes, calculate how a market trader at Citibank with $1,000,000 can make an intermarket arbitrage profit.
What is the value of this business at a discount rate : TH Manufacturers expects to generate cash flows of $129,600 for the next two years. At the end of the two years the business will be sold for an estimated $3.2 million. What is the value of this business at a discount rate of 14 percent?
What will be the price of the bond-coupon bond-face value : XYZ has a $1000 Face Value 5% Coupon Bond (paid semi-annually). The bond is selling for $937.19 today and matures in 8 years. What will be the price of the bond in 1 year (the bonds now have 7 years left until maturity) if the YTM investors demand in..
Rate is consistent with the market rates : Suppose you buy a 20-year bond with face value of $1000 which pays annual coupons with a coupon rate of R=5% . Let's say that that rate is consistent with the market rates, so you pay $1000 ('par'). After 5 years, right after the 5th coupon has been ..
Calculate the present value of a delayed perpetuity : What is the present value of a $9,800 ordinary perpetuity is the applicable discount rate is 7%? Calculate the present value of a delayed perpetuity of $890 that starts with the first cash flow at the end of year 7 if the applicable discount rate is ..
What is the present value of all three perpetuities together : You will receive a $100 annual perpetuity, the first payment to be received now, at Year 0, a $300 annual perpetuity payable starting at the end of Year 5, and a $200 semiannual (2 payments per year) perpetuity payable starting midway through year 10..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the firms operating cash flow

An all-equity firm has net income of $28,300, depreciation of $7,500, and taxes of $2,050. What is the firm's operating cash flow?

  Exercise good financial planning and control

Does your current organization (or an organization you have worked for in the past,) exercise good financial planning and control? Can it be improved? How? Why? Be prepared to cite real life examples as evidence.

  How much did you initially deposit

You make a deposit of $1,000 in an account that pays interest at a rate of 12% compounded quarterly. In two years, the balance will be? You opened a bank account that pays 8% interest compounded annually and you made a deposit. You made no more depos..

  Deposits are classified as transaction deposits

Suppose the reserve requirement for transaction deposits is 10% and it is 5% for nontransaction deposits. What is the total reserve requirement, in millions, for a bank with total deposits equal to $500 million, if $100 million of these deposits are ..

  New state-of-the-art camera to produce its monthly magazine

Hollywood Tabloid needs a new state-of-the-art camera to produce its monthly magazine. The company is looking at two cameras that are both capable of doing the job and has determined the following: Camera 1 costs $4,000. It should last for eight year..

  Financial leverage increases the expected rate of return

Financial leverage is the extent to which a firm is financed by securities with fixed costs, such as debt and preferred stock. The advantage of corporate debt is that it is a deductable expense, while equity income is taxable. Financial leverage i..

  Attempt to measure the net results of firms operations

Which of the following represents an attempt to measure the net results of the firm's operations (revenue versus expensive) over a given time period?

  Purpose of classifying cash flows into the categories

The cash flow data of Calendar Company for the year ended December 31, 2004 are as follows: Cash payment of dividends $ 80,000, Purchase of land $ 18,000, Cash payments for interest $ 20,000, Prepare a statement of cash flows for Calendar Company usi..

  Calculate debt-to-equity ratio

In its closing financial statements for its first year in business, ABC Enterprises, had cash of $242, accounts receivable of $850, inventory of $820, net fixed assets of $3,408, accounts payable of $700, short-term notes payable of $740, long-term l..

  Combines scenario analysis with sensitivity analysis

Which one of these combines scenario analysis with sensitivity analysis?

  Use the hamada equation to find harleys unlevered beta

Harley Motors has $8 million in assets, which were financed with $2.4 million of debt and $5.6 million in equity. Harley's beta is currently 0.6 and its tax rate is 40%. Use the Hamada equation to find Harley's unlevered beta, bU.

  What is the maximum it would be reasonable

What is the maximum it would be reasonable ( i.e., do no financial harm) for the owner of a building to pay for a new heated drive way system if it would save $1,500 per year in ploughing charges. The owner's cost of money is 15%/yr. Assume the syste..

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