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
Oksi-84 [34.3K]
2 years ago
5

A company forecasts free cash flow in next year to be $20 million, $25 million in second year, and 30 million in third year. Aft

er the third year, free cash flow will grow at a constant rate of 5 percent per year. If the overall cost of capital (WACC) is 10 percent, what is the current value from operations, to the nearest million
Business
2 answers:
Norma-Jean [14]2 years ago
8 0

Answer:

Current value from operations is $534.71 million.

Explanation:

The value from operations can be calculated by discounting back the free cash flow of the firm. The first three year's FCF will be discounted back using the WACC and when the growth rate o FCF becomes constant after Year 3, the terminal value will be calculated and discounted back too.

The current value from operations = FCF1 / (1+WACC) + FCF2 / (1+WACC)² + FCF3 / (1+WACC)³  +  [FCF3 * (1+g)  /  WACC - g] / (1+WACC)³

Current value from operations = 20 / (1+0.1)  +  25 / (1+0.1)²  +  30 / (1+0.1)³  +  [30 * (1+0.05) / (0.1 - 0.05)] / (1+0.1)³

Current value from operations = $534.71 million

Travka [436]2 years ago
6 0

Answer:

$535 million

Explanation:

Value of operations = present value of next 3 years FCF + present value of terminal value at end of 3 years

Terminal value at end of 3 years = Year 3 FCF * (1 + constant growth rate after 3 years) / (WACC - constant growth rate after 3 years)

Present value = future value / (1 + required return)number of years

The required return is the WACC

Value of operations = $535 million

You might be interested in
When you have an exclusive contract with a real estate agent, what should you expect and not expect?
zhenek [66]

Answer:

You should expect the following when you sign an exclusive contract with a real estate agent as a buyer:

  • the agent has to locate and identify potential properties that might interest you, and advice you about a fair market price
  • the agent is responsible for reviewing the paperwork
  • the agent is also responsible for preparing purchase offers, and other related services

You should expect the following when you sign an exclusive contract with a real estate agent as a seller:

  • the agent has to locate and identify potential buyers that might be interested in your property, and try to obtain the best possible price.
  • the agent is responsible for reviewing the paperwork
  • the agent is also responsible for negotiating purchase offers

4 0
3 years ago
Describe one specific way that taxes impact businesses. Describe another way that taxes impact individuals.
adelina 88 [10]

Answer:

By influencing incentives, taxes can affect both supply and demand factors. Reducing marginal tax rates on wages and salaries, for example, can induce people to work more. Expanding the earned income tax credit can bring more low-skilled workers into the labor force.

I think it might help you

7 0
2 years ago
Assume that you have already completed a 5-year international assignment working for KPMG as a Tax Consultant in Singapore.
lana [24]

Based on the information, it can be deduced that it's an indication of the uncertainty that exists in the Vietnamese cultural model.

From the complete information, Vietnam has low points in the avoidance index. This implies that they're less associated with their cultural roots and don't have concern for hiring white people.

Some of the solutions that can be applied for training the workers include providing them with ethical and language-based training and also encourage a team culture.

Learn more about model on:

brainly.com/question/25993624

4 0
2 years ago
Because corporate officers have the implied power to bind the firm in matters directly connected to its business, there is no li
mr Goodwill [35]

It should be noted that corporate officers have the implied power to bind the firm in matters directly connected to its business.

<h3>Who are corporate officers?</h3>

corporate officers serves as those workers in a company or an organization who are seen as officials and they have allocated duties and responsibilities .

These officers posses the power to bind the firm in matters directly connected to its business.

Learn more about corporate officers at,;

brainly.com/question/24518056

5 0
2 years ago
What actions would the fomc likely take if it were to pursue contractionary monetary policy using open market operations?.
tamaranim1 [39]

The key movements via are to increase the economy consist of a decreased bargain fee, buying government securities, and a decreased reserve ratio.

<h3>When the Fed makes use of contractionary policy?</h3>

When GDP in a kingdom is growing too fast, inflicting inflation to grow past a suited charge of two%, central banks will put in force a contractionary economic coverage. The Federal Reserve, or any principal financial institution, has three primary pieces of equipment to reduce the money supply.

A direct advantage of contractionary economic coverage is that it strengthens government budgets. As an instance, whilst the Fed's bargain price increases, the government earns extra cash from the banks that borrow budget from the Fed's cut price window. The government can use this supply of sales to offset spending and decrease price range deficits.

Learn more about contractionary monetary policy here brainly.com/question/27500362

#SPJ10

3 0
2 years ago
Other questions:
  • Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $18,000 (original cost of $40,000 l
    12·1 answer
  • Omar, an individual in the 37% tax bracket, wants to shift some of his income to a new corporation in order to take advantage of
    8·1 answer
  • Being undecided on what to do with $100,000 just received on F's policy, decides to leave the proceeds on deposit with the insur
    13·1 answer
  • Suppose that the federal government places a binding price floor on chocolate. To help support the price floor, the government p
    11·1 answer
  • On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. The truck was expected to have a four useful
    9·1 answer
  • Define artificial intelligence​
    13·1 answer
  • Carol Beal is the export manager at Gudrun Sjoden USA, a licensed distributor for a Swedish designer. Carol has North America an
    8·1 answer
  • Which descriptions offer examples of Management workers? Check all that apply.
    14·2 answers
  • Flychucker Corporation is evaluating an extra dividend versus a share repurchase. In either case $14,000 would be spent. Current
    14·1 answer
  • Match each organization and agreement with the phrase that best describes it.
    12·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!