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
Elodia [21]
4 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]4 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

You might be interested in
True or false: if the sales comparison approach cannot be developed because of a lack of sales data, the cost approach cannot be
vfiekz [6]

This is very true, no explanation

3 0
2 years ago
Compare and contrast the U.S. Constitution and the Arizona Constitution. Discuss three findings that account for the significant
marysya [2.9K]

Development, Structure and powers of U.S constitution and Arizona constitution have a huge comparison.

<u>Explanation: </u>

Unlike the United States Constitution, which was embraced in 1787, that wasn't until 1912 that perhaps the Arizona Constitution was accepted, leading to the creation of the 48 states

The common terms,' we the people' all constitutions begin with, but include many different things. After all, there were certain differences between one condition and another for a set of fifty.

The Arizona Constitution states that the legislature must be split into three parts-Legislative, Legislative and executive–which are not applicable to the United States Constitution

Many think of forms to deny or expel someone from office. They will enforce them in both Constitutions. All define the qualifications for their office if they would like to run for office. Another connection that I found was apparent but significant nonetheless.

They both mention the theme of religious liberty, one of the most valuable values in our society. Eventually, both inspire their lawmakers to negotiate with them.

5 0
3 years ago
A company purchased a commercial dishwasher by paying cash of $4,200. The dishwasher's fair value on the date of the purchase wa
kogti [31]

Answer:

$4,760

Explanation:

The value a company will record for the dishwasher will be the amount that was used to purchase the dishwasher plus the associated cost of transporting and installing the dishwasher.

The price of the dishwasher to be used is the actual amount it was bought and not the fair value.

Amount recorded for dishwasher= Price + Transportation + Installation fees

Amount recorded for dishwasher= 4,200 + 330 + 230

Amount recorded for dishwasher= $4,760

Note the fee for illegal parking is not considered because it is not a direct cost related to purchase of the dishwasher

5 0
3 years ago
__________ includes marketing research and the development of databases with information about products, customers, and competit
telo118 [61]

Answer:

marketing information system​ (MIS)

Explanation:

There are three primary types of marketing information marketers use to gain insights that will contribute to wise marketing choices: internal data, competitive intelligence, and marketing research.

6 0
2 years ago
Discussions of the economic results of rent control and of federal farm programs would be considered​ ________ analysis, and dis
mestny [16]

Answer: Positive and Normative

Explanation:

Positive economic analysis is basically something that is based on actual facts and cannot be approved or disapproved through views or opinions of others.

Whereas, normative economic analysis is something that focuses on the measure of how the policy is, whether good or bad or the way it should be or should become etc.

Rent control and federal farm programs are positive economic analysis. Its a fact.

Whether it is bad or good is normative economic analysis because you're able to value its fairness.

4 0
4 years ago
Other questions:
  • 1. What does a financial coach do?
    11·1 answer
  • When a grocery store chain adopts a new practice of its competitors by staying open 24 hours a day, requiring employees to work
    14·1 answer
  • 16.
    6·1 answer
  • Why must banks keep money on reserve?
    5·1 answer
  • Aggregate supply is best described as the
    15·1 answer
  • 4. AirCar LLC, a producer of consumer electronics, had provided its employees an annual bonus. After a change in management, the
    5·1 answer
  • A firm has the following forecast information for sales of Product X: April 15,000 units May 17,000 units June 19,000 units July
    7·2 answers
  • In 2005, mandy and hal (mother and son) purchased land for $600,000 as joint tenants with right of survivorship. of the $600,000
    5·1 answer
  • On January 1, 2015, VITO Corporation had 110,000 shares of its $5 par value common stock outstanding. On June 1, the corporation
    14·1 answer
  • Hailey bought her house in 2015 for $350,000. Since then, she has deducted $55,000 in depreciation associated with her home offi
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!