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
user100 [1]
3 years ago
15

Kinkead Inc. forecasts that its free cash flow in the coming year, i.e., at t = 1, will be -$10 million, but its FCF at t = 2 wi

ll be $20 million. After Year 2, FCF is expected to grow at a constant rate of 4% forever. If the weighted average cost of capital is 14%, what is the firm's value of operations, in millions?
Select one:
a. $158
b. $167
c. $175
d. $184
e. $193
Business
1 answer:
Gwar [14]3 years ago
3 0

Answer:

correct option is b. $167

Explanation:

given data

free cash flow FCF 1 = -$10 million

t = 1

free cash flow FCF 2= $20 million

t = 2

FCF grow rate = 4%

average cost of capital = 14%

to find out

what is the firm's value of operations

solution

first we get here firm value in year 2 that is express as

firm value in year 2 = expected FCF in 3 ÷ (cost of capital - growth)    .........1

put here value

firm value in year 2 = \frac{20*(1+0.04)}{0.14 - 0.04}

firm value in year 2 = 208 million

and

firm value of operation this year will be as

firm value = discounted value in year 2 + discounted FCF1 and FCF2     .............2

firm value = \frac{208}{(1+0.14)^2} +\frac{20}{(1+0.14)^2} +\frac{-10}{(1+0.14)}

firm value = 166.67 = 167 million

so correct option is b. $167

You might be interested in
Review the various strategies and assemble the strategies on the continuum from left to right in the order of magnitude from lea
sertanlavr [38]

Answer:

Following are the solution to this question:

Explanation:

In part A:

The following were it's less to one of the most foreign enterprises for businesses by using danger, contribution, and command.

  • Licenses
  • Exports
  • Franchises
  • Fabrication of contracts
  • Joint Undertaking/Strategic Arrangement
  • Specific Foreign Profits

In part B:

KFC- franchise

US Bank — Foreign Direct Investment

Soup by Campbell—Joint Venture/Strategic Alignment

Budweiser  Licensing

Exportation of international clients

Cell phone US —Manufacture of contracts

3 0
3 years ago
For each cost pool, identify an appropriate cost driver.
nikklg [1K]

Answer:

accounts receivable processing

or

order department

8 0
3 years ago
Refer to the data for Pennewell Publishing Inc. (PP). Assume that PP is considering changing from its original capital structure
Mnenie [13.5K]

Answer:

$57.69 per share

Explanation:

The computation of the  stock price per share immediately after issuing the debt but prior to the repurchase is shown below

Price per share = Value of equity ÷ number of Shares

where,

Value of equity is

= Value of operations + T-bills value - Debt value

= $576,923 + $259,615 - $259,615

= $576,923

And, the number of shares is 10,000 shares

So, the price per share is

= $576,923 ÷ 10,000 shares

= $57.69 per share

We simply applied the above formula

6 0
3 years ago
A Level 2 topic in a Word outline will be used in PowerPoint to create a
yan [13]

The level 2 topic would become the first level bullet item. (OPTION A)

Reason: The level 1 would become the slide titles and the level 2 would become the first level bullet items in the slide and the level 3 would become sub bullets or the second level bullet items and so on

So to conclude, the level 2 would become first level bullet item

8 0
3 years ago
Allison is concerned that she is not getting full disclosure of information from a mortgage broker who is hoping to refinance th
blsea [12.9K]
<span>Consumer Financial Protection Bureau (CFPB)</span>
5 0
3 years ago
Other questions:
  • What should Susan's three main talking points be to convince her Mom that she should file her own tax
    10·1 answer
  • Wiskurv Inc. is a large electronics supplier that does not rely exclusively on traditional financial measures for organizational
    13·1 answer
  • Asking questions about the employer during an interview _____. makes you seem uninformed takes the focus off your qualifications
    10·2 answers
  • Which step in the STP process develops descriptions of the different segments, which helps firms better understand the customer
    10·1 answer
  • The New York Stock Exchange (NYSE) originated as: a financial market where nearly 100 million shares of stock are traded every b
    8·1 answer
  • True or False
    10·1 answer
  • When calculating the net operating income of a property, it is important to identify any expenses that will be incurred in attem
    6·1 answer
  • What effect might the government have on​ oligopolies? In​ oligopolies, the government might A. promote competition with a paten
    6·1 answer
  • What is scarcity? I need to know
    11·2 answers
  • Which of the following The holding-period return (HPR) on a share of stock is equal to(s) the level of real interest rates? I) T
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!