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horrorfan [7]
3 years ago
15

Gonzales Corporation generated free cash flow of $88 million this year. For the next two years,the companyʹs free cash flow is e

xpected to grow at a rate of 10%. After that time, the companyʹsfree cash flow is expected to level off to the industry long-term growth rate of 4% per year. Ifthe weighted average cost of capital is 12% and Gonzales Corporation has cash of $100 million,debt of $300 million, and 100 million shares outstanding, what is Gonzales Corporationʹsexpected terminal enterprise value in year 2?
A) $1384.24
B) $1245.82
C) $1107.39
D) $968.97
Business
1 answer:
vodka [1.7K]3 years ago
6 0

Answer:

A) $1384.24

Explanation:

Terminal Value = Free Cash Flow (FCF) of last forecast *(1+ perpetual growth rate)/(discount rate – perpetual growth rate)

FCF of last forecast = $88*(1+10%)^2 = $106.48

Gonzales Corporationʹs expected terminal enterprise value in year 2 = $106.48 * (1+4%)/(12%-4%) = $1382.24

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Why is 10 cents earned far more valuable than a dollar found. Critical thinking.
mixer [17]
10 cents is more valuable than finding a dollar i think because of the connection with hardworking , rather earn something than find because are luck isn’t always trusted
4 0
2 years ago
a consumer's line or constraint shows various combinations of two products that can be purchased with a specific amount of incom
Umnica [9.8K]

A client's line or constraint suggests diverse mixtures of products that may be purchased with a particular amount of income Budget Line shows all the bundles/combinations of two commodities that a consumer can buy with the given income at a given set of prices.

The definition of income is the quantity of money obtained by way of someone, group, or corporation in the course of a certain time period. An example of earnings is a $70,000 a 12 months income. For most people, profits manner their overall profits in the shape of wages and salaries, the return on their investments, pension distributions, and different receipts.

Various mixtures of profits assets may be used to derive this type. as instance, at the maximum precise degree, the profits sources are blended into five components: wages and salaries, self-employment income (farm and non-farm), government switch payments, investment earnings, and other profits.

Learn more about income here:

brainly.com/question/26316390

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4 0
2 years ago
On January 1, 2018, Allgood Company purchased equipment and signed a six-year mortgagenote for $186,000 at 15%. The note will be
Ne4ueva [31]

Answer:

The correct answer is A: interest= $21048

Explanation:

An amortization schedule is a complete table of periodic loan payments, showing the amount of principal and the amount of interest that comprise each payment until the loan is paid off at the end of its term. While each periodic payment is the same amount early in the schedule, the majority of each payment is interest; later in the schedule, the majority of each payment covers the loan's principal.

Each payment is the same ($49,148), but the proportions of interest and capital pay changes. The interest proportion decreases from pay to pay.

Loan= 186000

i= 15%

n= 6 years

First pay:

i=186000*0,15=27900

amortization= 49148-27900=21248

Second pay:

i=(186000-21248)*0,15=24712

amort=49148-24712=24436

Third pay:

i=(164752-24436)*0,15=21048

amort=49148-21048=28100

While payments progress, interest decreases and amortization increases.

5 0
3 years ago
What's the future value of an investment of $1 a year for each of 4 years, at the end of the last year? Suppose the interest rat
Wewaii [24]

Answer:

4.51

Explanation:

We have to calculate fva. The future value of annuity

Here is the formula

Fva = A [( + I)^n-1/I]

Where a = annuity

I = interest rate

N = number of years

Inserting into formula

1[(1+0.08)^4 - 1/0.08]

= 1[(1.36049 - 1)/0.08]

= 4.51

Therefore the future investment is $4.51

3 0
3 years ago
The best description of business model risk is:
prohojiy [21]

The answer to the question is (C) how changing circumstances may affect the business and how the business model can be adjusted to cope with them.

Business model is defined as a model that a business uses to determine how it plans to generate revenue and in turn, profit. Another term for business model is profitability model. Thus business model risk implies risk management principles that are applied on business model contexts.

5 0
3 years ago
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