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3 years ago

What is a bond bubble and how did it help inflate the stock market?

Business

1 answer:

victus00 [196]3 years ago

6 0

The daily chart for the Dow shows how fast the stock market can decline when the 'inflating parabolic bubble' pops.

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Year 1 2 3 4 5 Free Cash Flow $22 million $24 million $29 million $32 million $35 million XYZ Industries is expected to generate

Elena L [17]

Answer:

The expected current share price is $7.66

Explanation:

According to the given data, we have the following:

FCF1 = $22 million

FCF2 = $24 million

FCF3 = $29 million

FCF4 = $32 million

FCF5 = $35 million

Growth Rate, g = 2%

WACC = 7%

In order to calculate the expected current share price we have to calculate first the following:

First, we have to calculate the FCF6 as follows:

FCF6 = FCF5 * (1 + g)

FCF6 = $35 million * 1.02

FCF6 = $35.70 million

Next, we have to calculate the Horizon Value of Firm as follows:

Horizon Value of Firm = FCF6 / (WACC - g)

Horizon Value of Firm = $35.70 million / (0.07 - 0.02)

Horizon Value of Firm = $714 million

Next, we have to calculate the Current Value of Firm as follows:

20,560,747+20,962,529+23,672,638+24,412,646+24,954,516+509,072,132

Current Value of Firm = $22 million / 1.07 + $24 million / 1.07^2 + $29 million / 1.07^3 + $32 million / 1.07^4 + $35 million / 1.07^5 + $714 million / 1.07^5

Current Value of Firm = $623.63 million

Next, we have to calculate the Value of Equity as follows:

Value of Equity = Current Value of Firm - Value of Debt + Value of Cash

Value of Equity = $623.63 million - $40.00 million + $14.00 million

Value of Equity = $597.63 million

Therefore, the Price per share = Value of Equity / Number of shares outstanding

Price per share = $597.63 million / 78 million

Price per share = $7.66

The expected current share price is $7.66

5 0

3 years ago

Read 2 more answers

Orochimaru is better than Sasuke and naruto

lesya692 [45]

Answer:

Yes braniest

Explanation:

5 0

2 years ago

During fiscal 2016, Shoe Productions recorded inventory purchases on credit of $337.8 million. The financial statement effect of

iren2701 [21]

Answer:

A. Increase liabilities (Accounts payable) by $337.8 million

Explanation:

The journal entry will be: Inventory (Credit - Increased) 337,860,000 and Accounts payable (Debit - Increased) 337,860,000.

The company must recognize the increase in the Inventory and the medium of payment (Accounts payable).

B is false because this operationn can also be a decrease in cash, but the amount in the operation is too high for this payment medium.

C is false because, the inventory is not sold, and COSG will be increased when the goods are sold.

D is also false because the inventory is increasing, not decreasing.

6 0

2 years ago

If ________ fails and cannot pay its liabilities, creditors can force the owners to pay the business's debts from the owners'

Gwar [14]

Answer:

partnership; least

Explanation:

In partnership, two or more people join together to form a firm called partnership firms for the motive of earning profits. The partners have unlimited liability which means they are responsible for meeting debt from their personal assets in case partnership defaults.

This feature of partnership offers assurance to the creditors that their investment is safe.

So, if partnership fails, the least an investor can expect to lose on his investment.

6 0

3 years ago

Denise Hunter had Thomasville brand living room furniture and wanted to buy a particular chair of the same brand. She made a few

miskamm [114]

Answer:

a specialty product

Explanation:

Based on the scenario being described within the question it can be said that For Denise, the chair can be categorized as being a specialty product. This is a product that very specific individuals will seek to purchase due to the product's unique characteristics or the individuals loyalty to a specific brand. Which is the case with Denise, since she is loyal to the brand and wanted a chair only from that specific brand.

7 0

2 years ago