1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
miss Akunina [59]
1 year ago
8

lauryn’s doll co. had ebit last year of $45 million, which is net of a depreciation expense of $4.5 million. in addition, lauryn

’s made $4.25 million in capital expenditures and increased net working capital by $4.1 million. assume that lauryn’s has a reported equity beta of 1.5, a debt-to-equity ratio of .3, and a tax rate of 21 percent. what is lauryn’s fcf for the year?(do not round intermediate calculations. enter your answer in millions rounded to 2 decimal places.)
Business
1 answer:
dem82 [27]1 year ago
5 0

If Lauryn's has a reported equity beta of 1.5, a debt-to-equity ratio of .3, and a tax rate of 21 percent.. The Free Cash Flow (FCF) of Lauryn's for the year is 20.45

FCF = (EBIT -Depreciation)× ( 1- Tax rate) + Depreciation - Capital expenditure - Working Capital investment = (45 -4.5 ) × ( 1 - 40%) + 4.5 - 4.25 -4.1 = 20.45

Beta Asset = Beta Equity /( 1 + (1-tax rate)×D/E) = 1.5/( 1 + ( 1-40%)× 0.3) = 1.2712

According To Capm WACC = Risk free rate + Betaasset × Market Risk Premium = 4% + 1.2712 × 12% = 19.2544%

Value of The firm = FCFF × ( 1+growth)/(Return - Growth) = 20.45 × 1.02/(19.2544% - 2%) = 120.89 million

  • Free cash flow (FCF) is the money a business makes after subtracting the cash it must spend to run its business and maintain its capital assets. Or to put it another way, free cash flow is the money that remains after a business pays its operating expenses (OpEx) and capital expenditures (CapEx).
  • A corporation may do whatever it wants with FCF, which is the money that is left over after paying for expenses like labor, rent, and taxes. A company's cash management will be aided by knowing how to compute and analyze free cash flow. Investors can improve their investment choices by using the FCF calculation to get insight into a company's financials.

Learn more about Free cash flow (FCF), here

brainly.com/question/16852008

#SPJ4

You might be interested in
LeCompte Corp. has $312,900 of assets, and it uses only common equity capital (zero debt). Its sales for the last year were $620
Gnom [1K]

Answer:

LeCompte Corp.

The profit margin that LeCompte Corp. would need in order to achieve the 15% ROE, holding everything else constant is:

A) 7.57%.

Explanation:

a) Data and Calculations:

Assets = $312,900

Common Equity = Assets = $312,900

Sales for the last year = $620,000

Net income after taxes = $24,655

Expected return on equity (ROE) = 15%

ROE (in amount) =  $312,900 * 15% = $46,935

Profit margin = Returns on Equity/ Sales * 100

= $46,935/$620,000 * 100

= 7.57%

b) The expected returns on equity in dollars is equal to the net income.  Therefore, we can use the ROE to calculate the profit margin.  The profit margin expresses the relationship between sales and profit.  It shows the profit made from each dollar sales.

4 0
2 years ago
True or false: The allowance method of accounting for bad debts records the loss from an uncollectible account receivable when i
PSYCHO15rus [73]

Answer:

false

Explanation:

The allowance procedure estimates bad debt expense before an uncollectible account receivable has been purposed to be uncollectible.

7 0
3 years ago
Agent fred fronts his cousin norm money to buy a client's house. shortly after the closing, agent fred flips the house and reali
VashaNatasha [74]
<span>This is the situation or case of real estate dealing in which Agent fred fronts his cousin norm money to buy a client's house. shortly after the closing, agent fred flips the house and realizes a substantial profit. agent fred's actions might be describe as Self-dealing.
Self-dealing is not considered good in real estate. In self-dealing you are interested in your own benefit more than the benefit of clients. There are many methods of dealing are used by agents in real estate field.</span>
3 0
3 years ago
The following data is available for Sampson Corporation. Sampson Corporation Accounts Item Amount Net income $200,000 Depreciati
frosja888 [35]

Answer:

cash flow provided by operation         260,000

Explanation:

net income                                        200,000

adjustment for non-monetary terms: (A)

depreciation expense       60,000

loss on sale of land            15,000

adjusted net income                         275,000

Change in working capital:

decrease in AR           30,000

Decrease in AP          (45,000) (B)

net change in WC:      (15,000) (C)

cash flow provided by operation         260,000

(A) we must focus on cahs movement so the depreciation and loss on sale which are non-mentary term. This are not related to cash

(B) the decrease in account receivable means we colelct from our customer more.

(C) the decrease in accounts payable represent we use more cash to pay up the suppliers

4 0
3 years ago
What’s the present value of a $900 annuity payment over five years if interest rates are 8 percent? (Do not round intermediate c
MAXImum [283]

Answer:

$3,593.44

Explanation:

The present value (P) of an annuity payment (A) at an annual rate 'r', compounded annually over of period of 't' years, is given by:

P=A*\frac{1-(1+r)^{-t}}{r}

If payments are $900 each at an 8 percent rate for five years, the present value is:

P=900*\frac{1-(1+0.08)^{-5}}{0.08}\\P=\$3,593.44

The present value of the annuity payment is $3,593.44

6 0
3 years ago
Other questions:
  • Precision Company estimates its machine-hour requirements for the four quarters to be 35,000 hours, 20,000 hours, 15,000 hours,
    10·1 answer
  • Suppose the equilibrium price in a perfectly competitive industry is​ $15 and a firm in the industry charges​ $21. Which of the
    6·1 answer
  • Business managers are often overly confident of their own hiring ability because they are more likely to monitor the successes o
    14·2 answers
  • Becky had net credit sales in 2020 of $2,000,000. At December 31, 2020, before adjusting entries, the balances in selected accou
    5·1 answer
  • A copy machine cost when new and has accumulated depreciation of . Suppose discards this machine and receives nothing. What is t
    8·1 answer
  • Two accountants for the firm of Elwes and Wright are arguing about the merits of presenting an income statement in a multiple-st
    5·1 answer
  • ________ is based on research that estimates how much of a product will sell over a given period of time.
    11·1 answer
  • Driving skills are a basic qualification of
    13·2 answers
  • The Manchester Corporation manufactures wooden pictures frames. In order to better manage costs, the Manchester Corporation had
    12·1 answer
  • Suppose that real GDP per capita in Italy is $32,000. If real GDP per capita is growing at a rate of 2.5% per year, how many yea
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!