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scZoUnD [109]
3 years ago
11

Ted Corporation expects to generate free-cash flows of $200,000 per year for the next five years. Beyond that time, free cash fl

ows are expected to grow at a constant rate of 5 percent per year forever. If the firms average cost of capital is 15 percent, the market value of the firms debt is $500,000, and Nico has a half million shares of stock outstanding, what is the value of Ted stock?
Business
1 answer:
wariber [46]3 years ago
7 0

Answer:

The value of Ted stock is $2.43

Explanation:

Free cash flow From Year 1 to 5 = $200000

Cash Flow Year 6 = 200000*1.05

                              = $210000

This cash flow is expected to grow forever, so the terminal value can be caluclated at Year 5 of the above perptuity by Gordon Growth model

Terminal Cash FLow Value at Year 5 = 210000/(15% - 5%)

                                                              = $2100000

Present Value of above stream

= 200000*PVIFA(5 yr, 15%) + 2100000*PVIF(5 yr, 15%)

= $200000*3.352 + $2100000*0.497

= $1714100  

Value of equity = Present Value of Firm - Value of debt

                          = $1714100 - $500000

                          = $1214100  

Number of shares = 500000

Value per share = $1214100/500000

                           = $2.43

Therefore, The value of Ted stock is $2.43

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Before ending the meeting, John Noble informed Howie that he would be sending out an e-mail to all employees asking for suggesti
Brut [27]

Answer:

a) employees can be motivated by open communication.

Explanation:

The answer is that Howie does not realize that employees can be motivated by open communication because by asking employees suggestions as to how jobs could be restructured to improve productivity, John Noble is trying to have a direct communication allowing employees to express their thoughts which will make them feel as part of the company and valued which will result in them feeling motivated to perform well in their job.

The other options are not right because employees won't be giving their opinions thinking on equity and ways to simplify job tasks are not the only suggestions that employees can provide.

4 0
3 years ago
Maintenance, which was about 18 of the total budget less than it spent on administrative personnel. The amount spent on administ
____ [38]

Answer:

the remaining budget for other expenses = 1/8 of the total budget

Explanation:

Since the city's administrative personnel expenses are 1/8 larger than both maintenance expenses and safety expenses, it means that safety expenses are equal to maintenance expenses.

Since maintenance expenses are 1/4 of the total budget, safety expenses are also 1/4 of the total budget.

Administrative personnel expenses are 1/8 higher, so that means that they equal 1/4 + 1/8 of the total expenses.

If we add the three categories = 1/4 + 1/4 + (1/4 + 1/8) = 7/8

So the remaining budget for other expenses = 1 - 7/8 = 1/8 of the total budget

8 0
3 years ago
Your daughter will start college one year from today, at which time the first tuition payment of \$58,000$58,000 must be made. A
Ierofanga [76]

Answer: I'll need $2,14,309.02 in my savings account in order to make tuition payments over the next four years.

We follow these steps in order to arrive at the answer:

In this question, we need to take into account that we need to pay 35% as taxes on interest earned.

So even though the interest rate on the deposit is 5%, only 1 - 35% = 65% will be available for use.

Hence, effectively the deposit will only earn 0.05*0.65 = 0.0325\\ or 3.25% interest after taxes.

We'll compute the the Present Value of the annuity of 58,000 for four years at 3.25% interest in order to determine the amount that is needed today.

The Present Value of an Annuity formula is

\mathbf{PV_{Annuity}= PMT\left ( \frac{1 -(1+r)^{-n}}{r} \right )}

Substituting the values in the equation above we get,

PV_{Annuity}= 58,000\left (\frac{1 -(1.0325)^{-4}}{0.0325} \right )

PV_{Annuity}= 58,000\left (\frac{ 0.12008695 }{0.0325} \right )

\mathbf{PV_{Annuity}= 58,000 * 3.69 = 2,14,309.02}

3 0
3 years ago
Which of these is NOT a safe skill to employ in the presence of road workers?
QveST [7]

Answer:

  • <em><u>C. Drive at the posted speed limit</u></em>

Explanation:

The answer choices for this question are:

  • A. Keep alert and watch out for construction barrels or cones
  • B. Slow down even if you don't think you'll hit a road worker
  • C. Drive at the posted speed limit
  • D. Keep as much distance as you can while navigating around them

Since the conditions of the road are not the best, you should drive below the posted speed of limit.

The only presence of workers on the road represent a risk for them and for you.

The number of lanes are reduced, the road could present potholes, dirt, stones, or even some substances that make the pavement slippery. You could not have good visibility.

All those risks make that you have to be extremely careful, reduce your speed, lower than than the posted speed limit.

Thus, you should:

  • A. Keep alert and watch out for construction barrels or cones
  • B. Slow down even if you don't think you'll hit a road worker
  • C. <u>NOT </u>drive at the posted speed limit
  • D. Keep as much distance as you can while navigating around them

8 0
3 years ago
Which term refers to the total value of all goods and services produced within a given period by a national economy domestic fac
stepan [7]

Answer:

Gross Domestic Product"refers to the total value of all goods and services produced within a given period by a national economy domestic factors of production

5 0
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