Answer:
Explanation:
Let's first determine the free cash flow of the firm
Particulars Years
1 2 3
EBIT 540 680 750
<u>Tax at 36% (0.36*540) (0.36*680) (0.36*750) </u>
Less: 345.6 435.2 480
Net Capital -
Spending 150 170 190
<u>Change in NWC 70 75 80 </u>
Less: 125.6 190.2 210
The terminal value at the end of T =(3 years) is:
= 2011.26
Finally, the value of the firm can be computed as follows:
Years Free Cash Flow PVIF PV
1 125.6 0.6589 107.88
2 190.2 0.7377 140.31
3 210 0.6336 133.06
<u>Terminal Value 2011.26 0.6336 1294.33 </u>
<u>Value of the firm ⇒ $1655.58</u>
Answer:
$69.47
Explanation:
D1 = ($1.45*1.20) = $1.7
D2 = ($1.7*1.20) = $2.04
D3 = ($2.04*1.20) = $2.45
Value after year 3 = (D3*Growth Rate) / (Required rate-Growth Rate)
Value after year 3 = ($2.45*1.08) / 0.11-0.08
Value after year 3 = $2.646 / 0.03
Value after year 3 = $88.20
Current share price = Future dividend and value*Present value of discounting factor(rate%,time)
Current share price = $1.7/1.11 + $2.04/(1.11)^2 + $2.45/(1.11)^3 + $88.20/(1.11)^3
Current share price = $1.5315315 + $1.65571 + $1.7914189 + $64.49107
Current share price = $69.4697304
Current share price = $69.47
Answer:
The answer is D. All of the above are plausible
Explanation:
A. Opportunity costs are relatively low is reasonable because as football game is taking place, most of the local people will go to the field to enjoy the field rather than spending their time at local shops/restaurants. Moreover, there are not many people from other towns visiting these facilities because of far distance.
B. is reasonable because it is high school football not professional football so the expenses spent on watching the game is low.
C. is is plausible because these towns are quite remote so watching their young neighbors/relatives playing may be one of the few entertainment choices available to them in weekend.
=> So, the answer is D.
Answer:
ShareHolders.
Explanation:
A share holder is the ultimate owner of any company who has invested his share in return of the profits earned.
Hence, this form of social responsibility by Pepsi will portray a positive image of Pepsi in the market and will ultimately help the shareholders in the form of increased revenue due to more sales and high profits.
I hope this helps. Best of Luck.
Answer: 8.23%
Explanation:
Firstly, we will calculate the cost of debt which will be:
= Yield (1-Tax rate)
= 9% × (1-0.34)
= 9% × 0.66
= 5.94%
Then, the Cmcost of preferred stock will be:
= 7/(104-9.40)
= 7/(94.6)
= 7.39%
We will also get the value of the cost of equity which will be:
= (Dividend expected common/Price common) + growth rate
= (2.50/76) + 8%
= 3.29% + 8%
= 11.29%
For Debt:
Cost after tax: 5.94
Weight = 50%
Weighted cost = 5.94 × 50% = 2.97
For Preferred stock:
Cost after tax: 7.39
Weight = 1%
Weighted cost = 7.39 × 10% = 0.74
For Common equity
Cost after tax: 11.29
Weight = 40%
Weighted cost = 11.29 × 40% = 4.52
Weighted average cost of capital = 2.97 + 0.74 + 4.52 = 8.23%
