Answer:
Value of company = $982.16
Explanation:
The free cash flow is the cash generated by a company that is not retained and reinvested. It is the cash flow available to all providers of capital . It is available to pay dividend or finance other project
The value of the company would be the present value of its free cash flow discounted at the weighted average cost of capital.
Value of company )year 4= 85/(0.12-0.065) = 1,545.45
Value of company (in year 0) = 1,545.45× 1.12^(-4)= 982.16
Value of company = $982.16 millions
Firstly, you should calculate the prices of your market basket, which basically means multiply all the goods with their prices and then add them together in their respective years. This would give you $260, $440, $690 and $1200 in the years 2010 to 2013 respectively. (follow along by noting everything down)
We see that the base year is 2013, therefore if we want to calculate the inflation rate from 2010 to 2011, we have to calculate their price indices. We do this by dividing the maket basket of our chosen years by the market basket of the base year, therefore the price index of 2010 is $260/$1200, giving us 21.6. The price index of 2011 would be $440/$1200, giving us 36.6. To calculate the inflation rate, you find the difference between your two price indices and divide it by the former year, which would be 36.6 - 21.6 / 21.6 x 100, giving us the inflation rate of 69.2%.
Answer:
The price/book ratio is 2.45
This price/book ratio indicates that the Chang, Inc company has 2.45 higher market value of the stock than the book value of the equity
Explanation:
For computing the price/book ratio, we have to apply the formula which is shown below:
= Market price of equity ÷ book value of equity
where,
the market value of equity = firm's earnings per share × price/earnings ratio × number of outstanding common stock shares
= $3.00 × 12.25 × 50,000 shares
= $1,837,500
And, the book value of equity is $750,500
Now put these values to the above formula
So, the answer would be equal to
= $1,837,500 ÷ $750,500
= 2.45
This price/book ratio indicates that the Chang, Inc company has 2.45 higher market value of the stock than the book value of the equity
<span>The most important factor is currency exchange rate.</span>
Check its weight. Then it will be easier for us