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
Dmitry_Shevchenko [17]
3 years ago
15

Victoria Enterprises expects earnings before interest and taxes ​(EBIT​) next year of $ 2.5 million. Its depreciation and capita

l expenditures will both be $ 295 comma 000​, and it expects its capital expenditures to always equal its depreciation. Its working capital will increase by $ 53 comma 000 over the next year. Its tax rate is 40 %. If its WACC is 11 % and its FCFs are expected to increase at 4 % per year in​ perpetuity, what is its enterprise​ value?
Business
1 answer:
Law Incorporation [45]3 years ago
3 0

Answer:

Value of Victoria Enterprises=  $21,498,285.71  

Explanation:

<em>Free cash flow represents the amount that is left to all the providers of capital after the payment of all all operating expenses, working capital and investment in fixed asset expenditures. </em>

It is computed as cash flow made from operation less capital expenditures

For Victoria Enterprises

The Free cash flow

= EBIT(1-T) + depreciation- increase in capital expenditure - increase in working capital

= 2.5 × (1-0.4) + 0.295 - 0.295 - 0.053

= 2,500,000 × (1-0.4) + 295,000 -295,000- 53,000

FCFF= $1,447,000

Value of a firm = FCFF (1+g)/(WACC-g)

g- growth rate - 4%, WACC- 11%, FCFF-1,447,000

Value of Victoria = 1,447,000 × (1+0.04)/(0.11- 0.04) =  21,498,285.71  

Value of Victoria=  $21,498,285.71  

You might be interested in
The operations of Winston Corporation are divided into the Blink Division and the Blur Division. Projections for the next year a
ycow [4]

Answer:

c. $88,700

Explanation:

The computation of operating income for Winston Corporation is shown below:-

Particulars              Dropping before              Dropping after

Sales a                  $469,000                           $383,500

                                                                         ($295,000 × 130%)

Variable cost b     $181,000                              $131,300

($101,000 × 130%)

Contribution margin $288,000                          $252,200

(c = a - b)

Direct fixed cost d  $160,000                          $87,000

Segment margin e $128,000                           $165,200

(e = c - d)

Allocated common cost f $76,500                  $76,500

Operating income(loss) $51,500                      $88,700

(g = d - e)

Therefore to reach the operating income(loss) we simply deduct the allocated common cost from segment margin.

5 0
3 years ago
Nova Electrics anticipates cash flow from operating activities of $12 million in 20X1. It will need to spend $9.5 million on cap
Ulleksa [173]

Answer:

$1.78 million

Explanation:

Firm’s projected free cash flow for the year 20X1:

= cash flow from operating activities - capital investment - Common stock dividend - preferred stock dividend

= $12 million - $9.5 million - $0.40 million - $0.32 million

= $1.78 million

Therefore, the firm’s projected free cash flow for the year 20X1 is $1.78 million.

6 0
3 years ago
For a company with significant uncollectible​ receivables, the direct​ write-off method is unsuitable because​ ________. A. it u
kumpel [21]

Answer:

The correctt answer is B. it violates the matching principle

Explanation:

The principle of correspondence, similar to the realization of income, is another considered important in the determination of accounting profits. According to the principle of correspondence, all costs and expenses related to the generation of income are made by doing the same with the latter. In other words, correspondence of income expenses is established, deducting those from these.

3 0
3 years ago
1. Most students initially believe that if they are good at math, they will be good at accounting.True / False
Contact [7]

Answer:

1. True

2. a & c

3. b

4. a, b & c

5. a, b & c

Explanation:

When you feel interested in math, it's likely accounting is suitable for you.

please read more articles about accounting in these links

https://www.accountingcoach.com/accounting-principles/explanation

https://studymoose.com/foundational-accounting-principles-and-terminology-essay

https://www.edx.org/course/management-accounting-acca-fma-f2-x-8

7 0
3 years ago
Significant change in the age structure of a population is one example of the impact of the​ firm's ________.
Margarita [4]
Managing the marketing function should begin with a thorough situation analysis of the firm's internal and external environments, including company strengths, weaknesses, opportunities, and <span>threats. 

Hope this answers the question. Have a nice day.</span>
8 0
3 years ago
Other questions:
  • Imagine yourself as a business owner just before an economic event such as a recession or depression. What impact would
    8·1 answer
  • Which of these statements about processes is not​ true?
    6·1 answer
  • A farmer who has fixed amounts of land and capital finds that total product is 24 for the first worker hired; 32 when two worker
    9·1 answer
  • All else​ equal, if job turnover has people leaving jobs and finding new jobs in the same​ industry, this will: A. increase the
    11·1 answer
  • Pecos Yo Company purchased a machine for $100,000 in cash on August 1 of Year 1. The machine has an estimated useful life of 10
    9·1 answer
  • Llano’s stock is currently selling for $50.00. The expected dividend one year from now is $1.50, and the dividend growth rate is
    8·1 answer
  • You notice that the price of Blu-ray players falls and the quantity of Blu-ray players sold increases. You suspect that _____ Bl
    10·1 answer
  • You plan to save $6,500 per year for the next 8 years. After the last deposit, you will keep the money in the account for 6 more
    11·1 answer
  • Role o vision, mission,and objectives in entreprenial development in Nigeria businesses? Pls describe
    12·1 answer
  • Suppose the marginal propensity to consume is 0.8 and the government cuts taxes by $40 billion. real gdp will _____ by _____.
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!