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
LuckyWell [14K]
3 years ago
10

Gonzales Corporation generated free cash flow of $86 million this year. For the next two years, the company's free cash flow is

expected to grow at a rate of 10%. After that time, the company's free cash flow is expected to level off to the industry long-term growth rate of 4% per year. If the weighted average cost of capital is 11% and Gonzales Corporation has cash of $100 million, debt of $275 million, and 100 million shares outstanding, what is Gonzales Corporation's expected current share price
Business
1 answer:
Viktor [21]3 years ago
7 0

Answer:

$12.49

Explanation:

The computation of the expected current price is shown below:

But before that first we have to determine the current firm value which is

Current firm value = ($86 million ×1.10^1) ÷ 1.11^1 + ($86 million × 1.10^2) ÷ 1.11^2 + {($86 million × 1.10^2 × 1.04) ÷ (0.11 - 0.04)} ÷ 1.11^2

= $1,424.48 million

Now

Expected current share price is

= ($1,424.48 - $275 million + $100 million) ÷ 100 million shares outstanding

= $12.49

You might be interested in
GHB Corp. is a manufacturer of consumer goods. It intends to sell its products in Vietnam as it is looking to enter into Asian m
Gnom [1K]

Answer:

A) Indirect exporting

Explanation:

An indirect exporting strategy refers to selling to an intermediary business. The intermediary business is responsible for selling and distributing the product in their domestic market.

This is the easiest way of exporting since GHB will only be responsible for delivering the goods to the intermediary, and it will not need invest anything in the country. The intermediary assumes the risks of selling the goods directly to customers or using wholesale distributors.

8 0
3 years ago
Welfare economics is the study of Select one: a. taxes and subsidies. b. how technology is best put to use in the production of
icang [17]

Answer:

Correct option is (d)

Explanation:

Welfare economics deals with the study of distribution of resources affect the overall welfare of the society and economy as a whole.

It is a part of economics that studies the role of government in aligning policies for the welfare of the society and ensuring that every section of the society is equally developed.

The concept was developed as inequality in distribution of wealth and resources was observed across different sections of the economy. Poor was becoming poorer and rich, becoming richer. This hampered overall growth of the economy, thereby giving birth to welfare economics.

7 0
3 years ago
The ______ is what a consumer or marketing intermediary actually pays for a product after subtracting any discounts, allowances,
julia-pushkina [17]
The correct answer is market price.
Market price is the price that you normally pay when you want to buy something. This price is usually higher than what the store that is selling it got it from the manufacturer, because it is buying the product in bulks. You as a consumer will have to pay this price when all discounts, allowances, and rebates are subtracted. 
7 0
3 years ago
Suppose the GDP of Australia is 100,000 AUD and the exchange rate between AUD and USD is 1.34 AUD=$1. What is the GDP of Austral
Hitman42 [59]

Answer:

The value of GDP in dollars = $74600

Explanation:

Given the GDP (gross domestic product) of Australia = 100000 AUD

Given the exchange rate, 1.34 AUD = $1.

Since we have given the total amount of GDP for Australia and exchange rate. Now we have to calculate the value of Australian GDP in the dollars. We can find this by dividing the total GDP with 1.34 AUD.

The value of GDP in dollars = 100000 / 1.34 = $74626.86 or $74600.

4 0
3 years ago
A company had been selling its product for $20 per unit, but recently lowered the selling price to $15 per unit. The company's c
sammy [17]

Answer:

$2,600

Explanation:

As we know that the inventory should be recorded at a cost or market value which ever is lower

In the given case,

The cost is

= 200 units ×$16 per unit

= $3,200

And, the market value is

= 200 units × $13 per unit

= $2,600

So as we can see that the lower value is $2,600 and the same is to be reported on the balance sheet

6 0
3 years ago
Other questions:
  • In anonymous surveys, on average people rate themselves as "above average" with regard to characteristics such as intelligence,
    7·1 answer
  • Stop and Go has a 4.5 percent profit margin and a 15 percent dividend payout ratio. The total asset turnover is 1.6 and the debt
    5·1 answer
  • Southern Food Service operates six restaurants in the Atlanta area. The company pays rent of $20,000 per year for each shop. The
    11·1 answer
  • A ________ is a retail firm owned by its customers. Members contribute money to open their own store, vote on its policies, elec
    7·1 answer
  • A common carrier bailee generally would avoid liability for loss of goods entrusted to its care if the goods area. Stolen by an
    5·1 answer
  • Bryan searched for a new bank prior to filling out his direct deposit form at his new employer. He noted that 2-4-7 Bank offered
    9·1 answer
  • Selected information from Jacklyn Hyde Corporation's accounting records and financial statements for 2021 is as follows ($ in mi
    5·1 answer
  • The Adams Corporation, a merchandising firm, has budgeted its activity for November according to the following information:
    12·1 answer
  • Pace Co. borrowed $10,000 at a rate of 7.25%, simple interest, with interest paid at the end of each month. The bank uses a 360-
    9·1 answer
  • Oligopolies exist because of barriers to entry. One of the most important barriers to entry is due to economies of scale. Why is
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!