Answer:
$710.84 million
Explanation:
Net income = $35 million
Depreciation = $20 million
Capital expenditures = $7 million
Tax rate = 21%
D/E ratio = 0.4
Growth rate = 6%
Equity beta = 1.25
So, firm's asset beta = Equity beta/(1 + D/E*(1-T))
= 1.25/(1 + 0.4*(1-0.21))
= 0.94985
So, Free Cash Flow to the Firm= NI + Depreciation - Capital expenditures
= 35 + 20 - 7
= $48 million
Risk free rate Rf = 5%
Market risk premium = 7.5%
So, firm cost of capital using CAPM is Rf + Beta*(MRP)
Kc = 5 + 0.94985*7.5
Kc = 12.1239
So, Firms value using constant dividend growth model:
FV = FCF*(1+g)/(Kc-g)
FV = 48*1.06 / 0.121239-0.06
FV = 50.88 / 0.061239
FV = 830.8430901876255
FV = $830.84 million
Debt = $120 million
Market Value of equity = FV - Debt
Market Value of equity = $830.84 million - $120 million
Market Value of equity = $710.84 million
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Two opportunities are presented to Alison: one offers a salary of $45,000 year and three weeks of vacation, while the other offers a salary of $54,000 and two weeks of vacation. If Alison accepts the $54,000 job offer, she will forfeit one week of vacation time.
The worth of what you forgo while deciding between two or more possibilities is known as opportunity cost. You make a choice because you believe it will benefit you more in the long run, despite any potential downsides. Due to opportunity cost, your investing decisions will almost always result in either immediate losses or future benefits.
The complete question is :
Alison is offered two jobs: one pays a salary of $45,000 per year and offers three weeks of vacation, while the other offer provides two weeks of vacation and a salary of $54,000. What is the opportunity cost for Alison if she chooses the job offer of $54,000
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Answer:
Break-even point in units = 12000 units
Explanation:
Break-even point is where sales and expenses are the same, thus the sales of a company are enough to cover its expenses.
Break-even point in units= Fixed cost / ( price of product-variable costs)
Variable expense ratio = variable expense per unit/price per unit
25% = 5/ price per unit
0.25=5/price per unit
5/0.25 = price per unit
$20 =price per unit
Break-even point in units= Fixed cost / ( price of product-variable costs)
Break-even point in units = $180,000 / ($20-$5)
Break-even point in units = $180,000 / $15
Break-even point in units = 12000 units
