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Elodia [21]
3 years ago
9

Quantitative Problem 1: Assume today is December 31, 2017. Barrington Industries expects that its 2018 after-tax operating incom

e [EBIT(1 – T)] will be $450 million and its 2018 depreciation expense will be $65 million. Barrington's 2018 gross capital expenditures are expected to be $110 million and the change in its net operating working capital for 2017 will be $30 million. The firm's free cash flow is expected to grow at a constant rate of 4.5% annually. Assume that its free cash flow occurs at the end of each year. The firm's weighted average cost of capital is 9%; the market value of the company's debt is $3 billion; and the company has 180 million shares of common stock outstanding. The firm has no preferred stock on its balance sheet and has no plans to use it for future capital budgeting projects. Using the free cash flow valuation model, what should be the company's stock price today (December 31, 2017)? Do not round intermediate calculations. Round your answer to the nearest cent. $ per share
Business
1 answer:
ziro4ka [17]3 years ago
3 0

Answer:

$29.630

Explanation:

For computation of stock price first we need to follow some steps which is shown below:-

Free cash flow = EBIT (1 - T) + Depreciation - Capital expenditure - Working capital

= $450 million + $65 million - $110 million - $30 million

=  $375 million

Value of firm = Free cash flow ÷ (WACC - Growth)

= $375 million ÷ (9% - 4.5%)

= $375 million ÷ 0.045

= $8,333.33 million

Value of equity = Value of firm - Value of debt

= $8,333.33 million - $3,000 million

= $5,333.33 million

Stock price = Value of equity ÷ Outstanding shares

= $5,333.33 million ÷ 180 million

= $29.630

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Windsor, Inc. uses a periodic inventory system. Details for the inventory account for the month of January 2022 are as follows:
Hoochie [10]

Based on the cost of the inventory to Windsor Inc, and the FIFO method, the gross profit for the month is C. $1,520

<h3>What is Windsor's gross profit?</h3>

FIFO means that the earlier goods are sold first.

210 units were left on hand which means that none of the Purchase on the 28th of January was sold.

The 15th Janaury purchase sold:
= 130 - (210 - 130)

= 50 units

The sales revenue is therefore:

= (260 + 50) x 9

= $2,790

The cost is:

= (260 x 4) + (50 x 4.60)

= $1,270

Gross profit is:

= 2,790 - 1,270

= $1,520

Find out more on FIFO at brainly.com/question/24137318.

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3 0
2 years ago
Chester's balance sheet has $86,386,000 in equity. If next year, assets decrease by $4,000,000 and liabilities increase by $2,00
DaniilM [7]

Answer:

$88,386,000

Explanation:

The computation of the chester book value is shown below:

= Equity balance + decrease in assets in the next year - increased in liabilities for the next year

where,

Equity balance is $86,386,000

Decrease in assets is $4,000,000

Increased in liabilities $2,000,000

Now place these values to the above formula

So, the book value is

= $86,386,000 + $4,000,000 - $2,000,000

= $88,386,000

6 0
3 years ago
Privack Corporation has a standard cost system in which it applies overhead to products based on the standard direct labor-hours
Alchen [17]

Answer:

1. $8.25

2. $313,500

Explanation:

Given that,

Variable overhead cost per direct labor-hour = $2.00

Total fixed overhead cost per year = $250,000

Budgeted standard direct labor-hours (denominator level of activity) = 40,000

Actual direct labor-hours = 39,000

Standard direct labor-hours allowed for the actual output = 38,000

1. Total overhead cost at denominator level of activity:

= Total fixed overhead + Total variable overhead

= $250,000  + (40,000  × $2.00 )

= $250,000  + $80,000

= $330,000

Predetermined overhead rate:

= Total overhead cost at denominator level of activity ÷ Budgeted standard direct labor-hours

= $330,000 ÷ 40,000

= $8.25

2. Overhead applied:

= Standard direct labor-hours allowed for the actual output × Predetermined overhead rate

= 38,000 × $8.25

= $313,500

3 0
3 years ago
Difference between listening and hearing?​
hodyreva [135]

Answer:

Simple. When you listen, you put an effort in to it. It is a conscious mental process where you direct you will power. Whereas hearing is all about you being NOT deaf (haha!) more technically Hearing means the ability to perceive sounds. Often, this is an unconscious mental process.

Explanation:

As we understood in the answer, there are two types of mental activities. Conscious and Unconscious. Conscious ones are those you put an effort to, like reading a book, studying, playing a video game, etc. Listening is like this. your attention and focus is on during listening!

Unconscious mental processes are those that you don't put an effort to and often happens even without you noticing that they are happening. hearing is one such thing, the faculty of perceiving the sound.

3 0
3 years ago
Read 2 more answers
The _____ requires that executive agencies and subcontractors and contractors of the federal government receiving more than $2,5
mariarad [96]

The Vocational Rehabilitation Act of 1973 requires that executive agencies and subcontractors and contractors of the federal government receiving more than $2,500 a year from the government engage in affirmative action for disabled individuals.

<h3><u>Explanation:</u></h3>

The law that grants the states for the independent living, vocational rehabilitation services,  client assistance and supported employment is The Rehabilitation Act of 1973. There are lot of programs that receives  federal financial assistance and are held by many federal agencies. The main aim of this act is to eliminate the discrimination that prevails based on disability.

The Rehabilitation Act has Section 501 which mainly focus on the prohibition of discrimination that exists in employees and  job applicants mainly on the basis of disability. This also makes the agencies to be engaged in affirmative action for individuals who has disabilities. They are providing them $2,500 a year for engaging with these activities.

8 0
3 years ago
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