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2 years ago

Quantitative Problem 2: Hadley Inc. forecasts the year-end free cash flows (in millions) shown below.

Business

1 answer:

Katarina [22]2 years ago

5 0

The stock price is mathematically given as

P=$57.64

<h3>What is the stock price?</h3>

Generally, the equation for is Value after year mathematically given as

$V=\frac{(FCF for year 5*Growth rate)}{(WACC-Growth rate)}\\\\V = \frac{(55.4*1.05)}{(0.09-0.05)}$

V= $1454.25

Hence, the current value is mathematically given as

I=Discounting factor equal to the future cash flows multiplied by their present value

$I=\frac{-22.76}{1.09} + \frac{38.8}{1.09^2}+ \frac{43.4}{1.09^3}+\frac{52.3}{1.09^4}+\frac{55.4}{1.09^5}+\frac{1454.25}{1.09^5}$

I=$1063.508769

current value for ordinary stock

I'=$1037.508769million

In conclusion, the stock price is

P=(1037.508769/18)

P=$57.64

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3 years ago

Suppose two cities are considering tearing down their stadiums to build new ones. In one city, the old stadium cost $5 million t

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Answer:

These are the options for the question:

A. They should be more willing to tear down the $5 million stadium, because it cost less to build.

B. They should be more willing to tear down the $50 million stadium, because it cost more to build.

C. The cost to build the old stadium shouldn’t be considered.

And this is the correct answer:

A. They should be more willing to tear down the $5 million stadium, because it cost less to build.

Explanation:

City A will likely be more willing to tear down its old stadium because it costed $5 million to build. City B, on the other hand, will have to think twice because a stadium that costed $50 billion to build could have more value than it seems, or the City could simply not have enough money to build a better new stadium (something that would probably cost more than $50 billion to do).

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4 years ago

Read 2 more answers

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Alja [10]

Answer:

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Explanation:

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3 years ago

At December 31, 2020, Carter Company had 450,000 shares of common stock issued and outstanding, 350,000 of which had been issued

Dennis_Churaev [7]

Answer:

$3.03

Explanation:

Calculation to determine What should be Twin Rivers' 2020 earnings per common share,

Using this formula

Earnings per common share=

Net Income for 2020/Weighted Average Shares Outstanding

Let plug in the formula

Earnings per common share=$1,160,000/ [(350,000 x 8/12) + (450,000 × 4/12)]

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3 years ago

In the last few decades the car manufacturing sector has found it difficult to compete with foreign car imports. High labor cost

vladimir2022 [97]

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This decrease in real wages will allow the companies in the industry to reduce labor costs in real terms and become more competitive with the foreign manufacturers.

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3 years ago