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
Korolek [52]
3 years ago
12

Gere Furniture forecasts a free cash flow of $40 million in Year 3, i.e., at t = 3, and it expects FCF to grow at a constant rat

e of 5% thereafter. If the weighted average cost of capital is 10% and the cost of equity is 15%, what is the horizon value, in millions at t = 3?a. $840b. $882c. $926d. $972e. $1,021
Business
1 answer:
LenKa [72]3 years ago
4 0

Answer:

Option (A) is correct

Explanation:

Given that,

Free cash flow in Year 3, FCF3 = $40 million

FCF to grow at a constant rate, g = 5%

Weighted average cost of capital, WACC = 10%

Cost of equity = 15%

Therefore,

Horizon Value at year, t = 3:

=\frac{FCF4}{(WACC-g)}

=\frac{FCF3(1+g)}{(WACC-g)}

=\frac{40(1+0.05)}{(0.10-0.05)}

=\frac{42}{0.05}

     = $ 840

You might be interested in
A company's gross profit was $118,350 and its net sales were $466,300. its gross margin ratio equals:
ladessa [460]

The gross margin ratio is a percentage resulting from dividing the amount of a company's gross profit by the amount of its net sales. In this case it would be 118,350/466,300 = 25.38%

3 0
3 years ago
Total sales revenue is $1000, total variable costs are $600 and total fixed costs are $1000. The price is $10 per unit. Compute
Marizza181 [45]

Answer:

hehehe hi3h irh3r  + 9 i0o

Explanation:

a

8 0
3 years ago
Sub to thunderofight12 to get free brainlyistSub to thunderofight12 to get free brainlyistSub to thunderofight12 to get free bra
oee [108]

ah yes the great "Business" move

5 0
2 years ago
Read 2 more answers
If an increase occurs in the demand for the output of industry A, we would expect all of the following to happen except:A. an in
ruslelena [56]

Answer:

The correct answer is option B.

Explanation:

The total revenue and profits of the industry as the price level  increases with increase in the demand.

When there is an increase in the demand for the output of an industry, that industry will increase the production to match the increase in the demand. The increase in production will cause output level to increase.

In order to produce more output the industry will require more inputs, so the demand for inputs will increase.

An increase in the demand for inputs will be accompanied by increase in their prices.

There will not be any decline in the price of inputs.

3 0
3 years ago
PB4.
EleoNora [17]

Answer:

Explanation:

Cost of advertising the product  - Selling & Administrative Cost

Fabric used to make the umbrellas  -Direct Materials Cost

Maintenance of cutting machines used to cut the umbrella fabric so it will fit the umbrella frame  -Manufacturing overhead Cost

Wages of workers who assemble the product  - Direct labour Cost

President's salary  - Selling & Administrative Cost

The salary of the supervisor of the people who assemble the product  - Selling & Administrative Cost

Wages of the product tester who stands in a shower to make sure the umbrellas do not leak  - Direct labour Cost

Cost of market research survey  - Selling & Administrative Cost

Salary of the company's sales managers  - Selling & Administrative Cost

Depreciation of administrative office building - Selling & Administrative Cost

4 0
2 years ago
Other questions:
  • A firm that has recently experienced an enormous growth rate is seeking to lease a small plant in Memphis, TN; Biloxi, MS; or Bi
    7·1 answer
  • Which is the most challenging kind of supply chain to manage according to hau lee?
    6·1 answer
  • Stevens Clothing Company has four warehouses spread throughout the country. The company is considering building another warehous
    14·1 answer
  • Which of these is NOT considered a critical contextual factor in project management? A. Organizational culture B. Organizational
    13·1 answer
  • In 2018, the country of Brazil, had imports of $78.02 billion and had a favorable balance of trade. This means that Brazil had:_
    13·1 answer
  • Sage Company is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $15.00
    6·1 answer
  • In the leadershio grid employees preferred which of the following styles?
    5·1 answer
  • All of the following are weaknesses of the payback method except:_______.
    11·1 answer
  • Concord Company sells merchandise on account for $5700 to Ivanhoe Company with credit terms of 2/10, n/30. Ivanhoe Company retur
    5·1 answer
  • Abc buys widgets for $5 cash and sells them on account for $8. From a cash flow perspective, the receivable is valued at?.
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!