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Pie
3 years ago
6

Barnette Inc.'s free cash flows are expected to be unstable during the next few years while the company undergoes restructuring.

However, FCF is expected to be $50 million in Year 5, i.e., FCF at t = 5 equals $50 million, and the FCF growth rate is expected to be constant at 6% beyond that point. If the weighted average cost of capital is 12%, what is the horizon value (in millions) at t = 5?a. $719b. $757c. $797d. $839e. $883
Business
1 answer:
kykrilka [37]3 years ago
6 0

Answer:

Horizon value = $883

so correct option is e. $883

Explanation:

given data

FCF is expected = $50 million

time = 5 year

CF growth rate = 6% = 0.06

average cost of capital = 12% = 0.12

to find out

the horizon value

solution

we know that FCF at year 6 is here

FCF at year 6  = principal ( 1 + rate )

FCF at year 6 = 50 × (1 + 6%)

FCF at year 6  = 53 million

and

Horizon value will be here

Horizon value =  \frac{FCF at year 6}{required rate- growth rate}  

Horizon value =  \frac{53}{0.12-0.06}

Horizon value = 883.33

Horizon value = $883

so correct option is e. $883

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rjkz [21]

Answer:

a. True

Explanation:

The process by which management plans, evaluates, and controls investments in fixed assets is called capital investment analysis. This process is also known as capital budgeting.

Generally, capital investment analysis or capital budgeting is used by business firms or governmental agencies to assess and measure the profitability of a long-term investment on a fixed asset such as real estate, machinery or factory equipments etc.

Hence, the management is able to choose the best option for investment after an assessment of which investment would yield a higher level of profits.

8 0
3 years ago
Which of the following is the deliberate process through which someone becomes aware of personal​ skills, interests,​ knowledge,
ANTONII [103]

Answer:

Career planning

Explanation:

Career planning is self-assessment and preparation undertaken by an individual who has a decent career path. Career planning phase is a continuous process of discovering oneself, establishing career aspirations, evaluating skills and finding the best career opportunities.

5 0
3 years ago
The following information relating to a company's overhead costs is available. Actual total variable overhead $ 75,000 Actual to
NARA [144]

Answer:

$5,000 favorable

Explanation:

The computation of the total variable overhead variance is given below:

= Budgeted machine hours allowed for actual output × Budgeted variable overhead rate per machine hour - Actual total variable overhead

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= $80,000 - $75,000

= $5,000 favorable

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6 0
3 years ago
Bill Mitselfik has purchased a bond that was issued by Acme Chemical. This bond has a face value of $1,000 and pays a dividend o
kramer

Answer:

$1,068.02

Explanation:

For computing the selling price of the bond we need to use the Future value formula or function i.e to be shown in the attachment below:

Given that,  

Present value = $1,000

Rate of interest = 10% ÷ 2 = 5%

NPER = 3 years × 2 = 6 years

PMT = $1,000 × 8% ÷ 2 = $40

The formula is shown below:

= FV(Rate;NPER;PMT;-PV;type)

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So, after applying the above formula, the selling price of the bond is $1,068.02

7 0
3 years ago
The difference between part-time work and job sharing is that a. people in job-sharing positions still receive benefits because
Helga [31]

Answer:

b. jobs that are classified as part-time are jobs that can be done in a shorter amount of time than that of a full-time job, whereas job sharing creates one full-time position out of two part-time employees

Explanation:

Based on the scenario been described, we can say that the difference between part time job and job sharing is, jobs that are classified as part-time are jobs that can be done in a shorter amount of time than that of a full-time job, whereas job sharing creates one full-time position out of two part-time employees, so option b is the correct answer. In part-time job, job are done in short period of time, whereby the employee will come and do his/her job within a short period of time and leave, while job sharing is a full time job but is been shared among full time employees to do their turns.

6 0
3 years ago
Read 2 more answers
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