Answer:
$1,310 million
Explanation:
The computation of the stock value as per the gordan model is as follows:
Value = (FCFF × (1 + growth rate)) ÷ (required rate of return - growth rate)
where,
required rate of return or WACC is
= Cost of debt × (1 - tax rate) × weight of debt + cost of equity × weight of equity
= 12.5% ×(1 - 0.35) × 800 ÷ (800 + 400) + 22.5% × 400 ÷ (400 + 800)
= 8.125% × 800 ÷ (800 + 400) + 22.5% × 400 ÷ (400 + 800)
= 8.125% × 66.67% + 22.5% × 33.33%
= 12.9167%
Now the value is
= ($66 × (1 + 0.075) - (12.9167% - 7.5%)
= $1,310 million
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Answer:
B. percentage of sales method
Explanation:
Under the Allowance method there are two ways of analysing the credit sales, one is defining a percentage of the total credit sales, basis in the economy situation and the past events about credit sales, the percentage is determined to estimates allowance for doubtful accounts.
The other way, that isn’t named in the option is through the aging method which classifies the account receivables into diferents age group and estimates the allowance for doubtful accounts considering the age of each group and asigning a percentage for each one.
Answer:
The answer is 3.5
Explanation:
Inventory turnover ratio is:
Cost of goods sold / Total or average inventory
Cost of goods sold is $322,000
Total Inventory in this question comprises work-in- process, finished goods and even raw materials.
So total inventory equals:
Production materials on hand $42,500 Work-in-process inventory $37,000
Finished goods on hand $12,500
Total inventory. $92,000
Therefore, inventory turnover ratio is
$322,000 / $92,000
= 3.5
Answer:
$280,894.67
Explanation:
Present value can be found by discounting the cash flows at the discount rate.
Present value can be calculated using a financial calculator:
Cash flow for year one = 5,600
Cash flow for year two = $48,200
Cash flow for year three = $125,000 + $250,000 = $375,000
Discount rate =16%
Present value = $280,894.67
I hope my answer helps you