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Marizza181 [45]
3 years ago
15

Union Pacific Railroad reported net income of $770 million in 1993, after interest expenses of $320 million. (The corporate tax

rate was 36%.) It reported depreciation of $960 million in that year, and capital spending was $1.2 billion. The firm also had $4 billion in debt outstanding on the books, rated AA (carrying a yield to maturity of 8%), trading at par (up from $3.8 billion at the end of 1992). The beta of the stock is 1.05, and there were 200 million shares outstanding (trading at $60 per share), with a book value of $5 billion. Union Pacific paid 40% of its earnings as dividends and working capital requirements are negligible. (The treasury bond rate is 7%.)A. Estimate the free cash flow to the firm in 1993.B. Estimate the value of the firm at the end of 1993.C. Estimate the value of equity at the end of 1993, and the value per share, using the DCF approach.
Business
1 answer:
levacccp [35]3 years ago
5 0

Answer

The answer and procedures of the exercise are attached in the following archives.

Explanation  

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.  

Download xlsx
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3 years ago
Which of the following does not represent an asset of a company?
mariarad [96]

Answer:

4. Amounts owed to suppliers

Explanation:

We know that

Balance sheet comprises of assets, liabilities and the stockholder equity

The assets could be classified into current asset, fixed asset, and the intangible assets

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The account receivable, equipment, supplies have come on the asset side of the balance sheet whereas the account payable or amount owed to suppliers have come on the liabilities side of the balance sheet

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3 years ago
When making decisions, managers should consider all relevant benefits and relevant costs, which include: (Check all that apply.)
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Explanation:

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Incremental costs focus on the additional costs involved in a project and so are very important. When making a decision for processing a good further for instance, management needs to know if the incremental cost will be covered by the extra profit that will be gained.

3 0
3 years ago
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Answer:

$30,900

Explanation:

Assets are major components of the statement of financial position. They are defined as anything owned by a company as a result of past activities that result to an inflow of economic benefits

                     Cash    Asset    Liability     Expenses  

Capital        11000     11000

Equipment    (1400)    1400                      

Loan             15000    15000     15000

Rent               (100)      (100)                           100

Inventory       (400)      400

Sales             3200      3200

Total                            30900     15000

7 0
3 years ago
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