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ch4aika [34]
2 years ago
9

Dewey Corp. is expected to have an EBIT of $2.45 million next year. Depreciation, the increase in net working capital, and capit

al spending are expected to be $180,000, $85,000, and $185,000, respectively. All are expected to grow at 18 percent per year for four years. The company currently has $13 million in debt and 800,000 shares outstanding. The company’s WACC is 9.1 percent and the tax rate is 21 percent. You decide to calculate the terminal value of the company with the price-sales ratio. You believe that Year 5 sales will be $27.4 million and the appropriate price-sales ratio is 1.9. What is your estimate of the current share price?
Business
1 answer:
sdas [7]2 years ago
7 0

Answer:

 $41.13              

Explanation:

The current share price can be calculated by first deducting the debt from the firm value then divide the equity value by the number of shares outstanding. To calculate the firm value first we need to calculate the free cash flows and after calculating free cashflows we will multiply them with the Compan's WACC to reach the present value of each free cash flow

DATA

EBIT = 2.45m

WACC = 9.1%

Tax rate = 21%

Debt  = 13m

Outstanding shares = 800,000

NOTE: Calculations are attached in attachments

Download xlsx
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Chuck, a single taxpayer, earns $75,000 in taxable income and $10,000 in interest from an investment in City of Heflin bonds. (U
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Answer:

a. 24%

b. 12%

Explanation:

Marginal tax rate is an incremental tax rate that is paid out of the taxable income of a tax payer. It represents the rate at which the last unit of dollar of the taxable income is taxed. The marginal rate for each income bracket is supplied by the Internal Revenue Service (IRS).

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The marginal tax rate for taxable income of $35,000 is 12% according US tax rate schedule.

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3 0
3 years ago
Which statement below best captures the overall point and focus of the New York Times article, Document 3?
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Answer:

Correct Answer:

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3 years ago
. For a certain item, the cost-minimizing order quantity obtained with the basic EOQ model is 200 units, and the total annual in
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Answer:

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3 years ago
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