Answer:
c. $386.7 million
Explanation:
The enterprise value of the firm is the present value of its future free cash flows discounted at the weighted average cost of capital as well as the present value of free cash flow terminal value beyond year 3 as shown thus:
Year 1 FCF=$10 million
Year 2 FCF=$20 million
Year 3 FCF=$30 million
terminal value=Year 3 FCF*(1+terminal growth rate)/(WACC-terminal growth rate)
terminal growth rate=2%
WACC=9%
terminal value=$30*(1+2%)/(9%-2%)
terminal value=$437.14 million( $437.1 million is wrong as it is the terminal value, not the enterprise value)
present value of FCF=FCF/(1+WACC)^n
n is the year in which the free cash flow is expected, it is 1 for year 1 FCF, 2 for year 2 FCF , 3 for year 3 FCF as well as the terminal (the terminal value is also stated in year 3 terms)
enterprise value=$10/(1+9%)^1+$20/(1+9%)^2+$30/(1+9%)^3+$437.14 /(1+9%)^3
enterprise value= $386.7 milion
Answer:
Explanation:
a. The journal entry is
Equipment A/c Dr $50,400
To Cash A/c $50,400
(Being the equipment is purchased for cash)
Depreciation expense A/c Dr $5,400 ($600 × 9 months)
To Accumulated depreciation - Equipment A/c $5,400
(Being the depreciation expense is recorded)
b. The balance is
For depreciation expense, it is $5,400
And, for the accumulated depreciation it is $5,400
Answer:
0.0556 or 5.57%
Explanation:
Given that,
stock has a beta = 1.25
Dividend paid by company, D1 = $0.40
Expected growth rate of dividend, g = 5%
Expected return on the market, r = 12%
Treasury bills are yielding, t = 5.8%
Recent stock price for Berta, p = $75
Common stock (under DCF method):
= 0.0056 + 0.05
= 0.0556 or 5.57%
Answer:
Are u a boy or girl name change gardim I
Answer:
The airport should invest a uniform amount of $357,958.55
Explanation:
Hi
First of all, we need to know how much will cost the land in five years so we have, , that means that the future value of the land will be $2'100,000.
Now we can use with and %, so we have