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adelina 88 [10]
2 years ago
15

6. Goog company has an EBIT*(1-tax) of $9,737, a depreciation of $1,851, change of NOW of $381, and a capital expenditure of $3,

438. The growth rate of free cash flow is expected to be 17.68% for next two years. The beta of the firm is 1.19, the target capital structure of the firm is 6% debt 94% equity, the cost of debt is 3%, the tax rate is 40%, the market risk premium is 8% and the risk free rate is 1%. Given a comparable Price to Ebitda ratio of 14.15 and a market value of debt of $4,200, what is firm’s equity value using DCF approach?
Business
1 answer:
lisov135 [29]2 years ago
4 0

Answer:

$20,772.12    

Explanation:

For computing the firm equity value using DCF analysis, first we need to do the following calculations which are shown below:

Required rate of return = Risk free rate of return + Beta × market risk premium

= 1% + 1.19 × 8%

= 10.52%

Now the WACC is

= Weight of equity × Cost of equity + Weight of debt × cost of equity × (1 - tax rate)

= 94% × 10.52% + 6% × 3% × (1 - 40%)

= 10%

Now the Free cash flow is

= Net income + depreciation expense - change in non working capital - change in capital expenditure

= $9,737 + $1,851 - $381 - $3,438

= $7,769

Now the enterprise value is

= $7,769 + {$7,769 + (1 + 17.68) ÷ (1 + 10%)} + (1 + 17.68)^2 ÷ (1 + 10%)^2

= $24,972.12

So the firm equity value is

= Equity - debt

= $24,972.12 - $4,200

= $20,772.12    

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The Allowance for Bad Debts account has a credit balance of $ 5 comma 000$5,000 before the adjusting entry for bad debts expense
GaryK [48]

Answer:

62,200 allowance ending

Explanation:

allownce 5,000 credit

<u>Because the bad debt is calculate over the sales,</u> the bad debt expense is the result of that estimated, without considering the beginning balance of the allowance.

22% of net credit sales will be uncollectible:

260,000 x 22% = 57,200

<u>Now ending balance will be beginning + uncollectible for the period</u>

5,000 beginning

57,200 uncollectible for the period

62,200 allowance ending

4 0
3 years ago
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How to be a successful entrepreneur?
pishuonlain [190]

Answer:

Don’t take ‘no’ for an answer

Learn from the best

Stay hungry and ambitious

Never stand still; evolve with the times

Nurture long-term business relationships

Inspire those around you

Trust your gut instinct, not just your spreadsheet

Explanation:

It takes hard work and dedication and they are many free sources that is available today such as videos

7 0
2 years ago
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An example of a stressor at the group level is
Marta_Voda [28]

An example of a stressor at the group level is an excessive job demands. The Option A is correct.

<h3>What is a stressor in group?</h3>

Also known as an interpersonal demands, means the pressures created by other employees. A group related stressors does include some factors like conflicts, poor communication, unpleasant relationship as well as fear of being ostracized from the group as a valued member.

While working with a superior, peers or subordinates with whom one does not get along can be a constant source of stress. Some people can effectively deal with conflicts and misunderstandings and resolve issues as they arise. Many, some find it difficult to do this and build internal stresses for themselves.

The lack of social support from colleagues and poor interpersonal relationships can cause considerable stress as, most especially among employees with a high social need. Sometimes, an individuals try to avoid these stresses by remaining absent as frequently as possible and even start looking for new jobs.

Read more about stressor

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5 0
8 months ago
Jacobs Company has inventory of 15 units at a cost of $12 each on June 1. On June 5, Jacobs purchased 10 units at $13 per unit.
vekshin1

Answer:

$210

Explanation:

Date    Description   Units  Price  Total Balance

1-Jun    Opening        15   $12   $180   $180  

5-Jun    Purchase      10      $13     $130          $310  

12-Jun   Purchase      20     $14     $280         $590  

17-Jun   *Sale             -30               -$380        $210  

*Working

Sale

Date          Units   Price     Total

17-Jun       -15 $12   $(180)  

                -10   $13   $(130)  

                -5   $14   $(70)  

Total Sale -30           -$380  

So, the correct answer is $210.

3 0
3 years ago
Some operational risks in a supply chain are beyond the control of the purchaser or supplier, and some are within their control.
Yanka [14]

Answer:

Letter a. is correct. <u>TRUE.</u>

Explanation:

This statement is correct because a supply chain is part of the macroenvironment, and operational risk can be defined as different results than expected due to internal or external events.

The current economic scenario appears to be unstable, as political, economic, technological, social and other changes are occurring all the time, which can represent significant external risks in a supply chain, where there is no control by the buyer or supplier.

Some examples of uncontrollable operational risks are:

  • Fraud and misconduct;
  • Systemic failure;
  • Safety;
  • Human error.

For this reason, the importance of risk management, which includes planning, identification, qualitative and quantitative analysis, response planning and monitoring and control processes, which together will provide subsidies for less vulnerability in the supply chain and less risk.

8 0
3 years ago
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