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kkurt [141]
2 years ago
10

An analyst seeks to determine the value of Bulldog Industries. After careful research, the analyst believes that free cash flows

for the firm will be $80 million in the upcoming year (year 1) and will grow at 10% annually for each of the two following years (years 2 and 3). The free cash flows will grow at a rate of 5% after year 3. What is the Terminal Value (in millions of $) of Bulldog at the end of year 3 at a WACC of 10%?
Business
1 answer:
Reil [10]2 years ago
3 0

Answer:

$2,033

Explanation:

The computation of the terminal value at the end of the year 2 is shown below:

= {Free cash flow of the firm × (1 + growth rate) × (1 + growth rate) + (1+ growth rate)} ÷ (WACC - growth rate)

= {($80 million × (1 + 0.10) × (1 + 0.10) × (1 + 0.05)} ÷ (10% - 5)

= $101.64 ÷ 0.05

= $2,033

We simply applied the above formula so that the Terminal value could arrive

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Cody Barnett describes starting and managing your own business as
artcher [175]

Answer:

Time consuming.

Explanation:

More and more people dream of having their own business not only to dedicate themselves to doing something they like, but also to have more freedom with their time and money.

However, despite the increase in the number of people with this entrepreneurial spirit, not all of them have a deep knowledge of what it means to undertake and are not well aware of the advantages, disadvantages, how to start a business and what kind of profitable businesses can be developed. In addition, many people do not know that setting up their own business is difficult, laborious and time consuming and requires a lot of patience, perseverance and dedication.

4 0
3 years ago
The salesperson who is responsible for ongoing business with a customer who uses a product, satisfying their long-term needs and
yan [13]

Answer: Account manager

Explanation: The account manager is that salesman of a company who is responsible for managing sales and relationship with particular customers of the company. The account manager is assigned accounts of customers of which he has to maintain relationships with.

The main focus of account manager is to manage sales with customers and identify new business opportunities if any.

Thus, Account manager is the right answer for the given case.

5 0
2 years ago
5 Make versus buy, activity-based costing. The Svenson Corporation manufactures cellular modems. It manufactures its own cellula
zmey [24]

Answer:

See below

Explanation:

Expected manufacturing costs 2018:

Direct materials $170 × 10,000 = $1,700,000

Direct labor $45 per unit × 10,000 = $450,000

Variable overhead per batch 1,500 × 80 = $120,000

Fixed overhead:

Avoidable $320,000

Not avoidable $800,000

1. Calculate that total expected manufacturing cost per unit of making CMCBs in 2018

= $1,700,000 + $450,000 + $120,000 + $320,000 + $800,000

= $3,390,000

Cost per unit = $3,390,000/10,000 units

= $339 per unit

2. Svenson should keep manufacturing the CMCBs

Costs if CMCBs are purchased from Minton = ($300 × 10,000) + $800,000

= $3,000,000 + $800,000

= $3,800,000

It means that the cost of purchasing is $410,000 [ $3,390,000 - $3,800,000] higher than the cost of manufacturing.

5 0
2 years ago
Mathrans, a textile firm, wants to hire two costume designers for a new movie project. To precisely determine the future job per
irga5000 [103]

Answer:

<u>Validation</u>

Explanation:

The validation process occurs when an organization needs to know the skills and performances of some job seekers. Through a test with selected measures, such as construction measures, content and criteria, it is possible for the company to know and predict if a candidate is able to perform the tasks assigned to the position he is running.

7 0
3 years ago
Mr. Smith put his laptop up for sale. He is aware of the fact that the laptop malfunctions frequently. However, none of the pote
zaharov [31]

Answer: The presence of asymmetric information

                                               

Explanation:  In simple words, asymmetric information refers to the situation when one party to a contract have extra information regarding a subject than the other party of the contract.

Asymmetric information creates the potential of misconduct from the leading party as they can easily cheat the other party by concealing that important information.

In the given case, Mr. Smith was aware that his laptop is not working properly but still he sold its to a customer who was not aware of it. Thus, we can conclude that the correct option is C.

5 0
3 years ago
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