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lara [203]
3 years ago
10

A company is expected to have free cash flows of $0.75 million next year. The weighted average cost of capital is WACC = 10.5%,

and the expected constant growth rate is g = 6.4%. The company has $2 million in short-term investments, $2 million in debt, and 1 million shares. What is the stock's current intrinsic stock price?a. $17.39b. $17.84c. $18.29d. $18.75e. $19.22
Business
1 answer:
Vesnalui [34]3 years ago
7 0

Answer:

The stock's current intrinsic price is c. $18.29

Explanation:

Hi, by definition, the intrinsic value of a stock is defined by the present value of its future free cash flows, in our case, for the next year it will be $0.75 million and it will grow at a 6.4% rate, every year, "forever".

SInce there are $2 million in short term investment and $2 million in debt, both amounts cancel out each other therefore, all we have to do is to bring to present value the future free cash flows, as follows.

PresentValue=\frac{FCF(1)}{WACC-g}

So the value of all the outstanding share of the company is:

PresentValue=\frac{750,000}{0.105-0.064} =18,292,683

Since there are 1 million shares, each one is worth $18,292,683/1,000,000= $18.29. So the answer is c.

Best of luck.

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kumpel [21]

Answer:

the gross profit reported is $1,518

Explanation:

The computation of the amount of gross profit that reported is shown below:

But before that the gross profit percentage is

= (Sales - cost of goods sold) ÷ (sales)

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= 20%

Now the gross profit is

= $25,300 × 20% × 30%

= $1,518

Hence, the gross profit reported is $1,518

8 0
3 years ago
In this account of Budweiser’s history, there is evidence of both "Big M" marketing and "little m" marketing.
n200080 [17]

Answer:

Big M

Explanation:

The Big M Marketing is creating value for specific people. creating value here means understanding the peoples needs and motivations and using it to create a product to deliver to the people.

Budweiser is been advertised as the king of beers in america. this symbol has demonstrated its marketing strategy at identifying the peoples needs and thereby creating a value for it customers through its brand.

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Only one commercial bank in the banking system has an excess reserve, and its excess reserve is $400,000. This bank makes a new
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Answer:

money supply will increase by 2,400,000

Explanation:

the expansion f the money supply will be:

the money multiplier will be:

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The reasoning for the multiplier effect is the following:

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This amount, can generate a new loan for, the remainder after subtracting the required reserve.

300,000 - 12.5% = 262,500

And this, once used will also end in a deposit. This opens the posibility for another loan, after reducing the reserve

262,500 - 12.5% = 229,687.5‬

This can be reapeat again and again and the limit for this is the formula state above:

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5 0
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3. Columbia Corporation deposited $2,000 in an account that pays 12% interest annually. If the interest is compounded continuous
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Answer:

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8 0
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1. How do customers judge the quality of a supermarket? 2. Indicate how and why each of these factors is important to the succes
kirza4 [7]

Answer:

1. How do customers judge the quality of a supermarket?

They judge the quality of a supermarket depending on their values and most urgent needs.

Customers who value quality, and even luxury, will say that a good supermarket is one that offers high quality products.

Customers who value price, will prefer a low-cost supermarket.

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c. Capacity planning - the supermarket needs to know what it is actually able to do, and what projects it can embark on, for this, it needs to do a lot of capacity planning.

d. Location - Location is extremely important for a supermarket. It determines a large part of the customer demand because customers prefer supermarkets to be close to where they live.

e. Inventory management - Supermarkets need to manage inventories carefully, specially because a lot of the goods that a supermarket sells, are perishables.

f. Layout of the store - The Supermakert needs to be careful when determining the layout of the store. Customers want a layout that is easy to navigate, and where goods are placed according to a coherent classification.

g. Scheduling - The supermarket needs to establish a convenient schedule for its customer base.

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Wegmans is characterized for its early adoption of ground-breaking technologies. For example, recently Wegmans developed a mobile application to assist blind shoppers.

6 0
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