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kifflom [539]
3 years ago
9

The free cash flow to the firm is reported as $205 million. The interest expense to the firm is $22 million. If the tax rate is

35% and the net debt of the firm increased by $25, what is the market value of the firm if the FCFE grows at 2% and the cost of equity is 11%?a. $2,168 billionb. $2,397 billionc. $2,565 billiond. $2,998 billion
Business
1 answer:
Sergeu [11.5K]3 years ago
4 0

Answer:

The correct answer is $2,444.6 billion

Explanation:

FCFE= FCF+ Increase in debt- Interest (1-t)

        =  $205+$25-$22( 1-0.35)

        =$215.7

Market Value = [(215.7)1.02)]/ [11%-2%]

                      =$2,444.6

Assuming a single period growth rate of 2%,

the forecasted FCFE =$215.7(1+0.02)

                                  =$220.01 billion

Although this is not available in the options provided ,$220.01 billion is the correct answer.

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Leisure Lodge Corporation is expected to pay the following dividends over the next four years: $22.00, $15.00, $6.00 and $3.20.
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Answer:

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Explanation:

The dividend discount model (DDM) can be used to calculate the price of the stock today. DDM calculates the price of a stock based on the present value of the expected future dividends from the stock. The formula for price today under DDM is,

P0 = D1 / (1+r)  +  D2 / (1+r)^2  +  ...  +  Dn / (1+r)^n  +  [(Dn * (1+g) / (r - g)) / (1+r)^n]

Where,

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  • g is the constant growth rate in dividends
  • r is the discount rate or required rate of return

P0 = 22 / (1+0.19)  +  15 / (1+0.19)^2  +  6 / (1+0.19)^3  + 3.2 / (1+0.19)^4  +  

[(3.2 * (1+0.04) / (0.19 - 0.04)) / (1+0.19)^4]

P0 = $45.299899  rounded off to $45.30

Read more on Brainly.com - brainly.com/question/22666091#readmore

7 0
3 years ago
The supplies account had a beginning balance of $1,693. Supplies purchased during the period totaled $4,413. At the end of the p
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Answer:

Debit Supplies expense $5,661

Credit Supplies account $5,661

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At the time of purchasing supplies, the entries includes a debit to supplies accounts, and a credit to cash or accounts payable which is dependent on whether the cash purchased was done via cash or an account

For supplies used, debit supplies expense and credit supplies account. The movement in supplies account over a period is due to purchases and its expressed as;

Opening balance + Purchases - Supplies used = closing balance

$1,693 + $4,413 - Supplies used = $445

$6,106 - Supplies used = $445

Supplies used = $6,106 + $445

Supplies used = $5,661

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A law enforcement agent is in charge of getting a writing sample from an uncooperative suspect. the agent puts the suspect in a
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