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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

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Papessa [141]

<u>Answer:</u> Rate of usage segmentation differentiates among heavy users, medium users, light users, and nonusers.

<u>Explanation:</u>

Rate of usage segmentation helps to divide the consumers based on the usage rate of the products. The consumption level of the consumers differs from one another.

Groups can be divided as heavy users, medium users, light users, and nonusers. By dividing them into groups the organizations are able to concentrate on heavy users rather than light users.

This is to maximize their profits the usage pattern of the consumers are also studied. Based on the usage pattern the companies change their products to be more user friendly.

7 0
3 years ago
Certain closing costs will be prorated to account for the period of time during which the seller occupied the house. If a transa
tankabanditka [31]

Answer:

Option (a) $372.60

Explanation:

Data provided in the question:

Number of days during which the seller occupied the house = 136 days

Estimated cost for the entire year = $1,000

Now,

The period of time during which the seller occupied the house in years

= Number of days during which the seller occupied the house ÷ Total number of days in a year

= 136 ÷ 365

= 0.37260

Therefore,

The amount that the buyer will be credited = 0.37260 × $1,000

= $372.60

5 0
3 years ago
Suppose that technological advancements stimulate $20 billion in additional investment spending. If the MPC = 0.6, how much will
grin007 [14]

Answer:

option (D) $50 billion.

Explanation:

Data provided in the question:

Additional investment spending = $20 billion

MPC = 0.6

Now,

Increase in aggregate demand = [1 ÷ (1 - mpc) ] × Investment

or

Increase in aggregate demand =  [1 ÷ (1 - 0.4) ] ×  $20 billion

or

Increase in aggregate demand = (1 ÷ 0.4) × $20 billion

or

Increase in aggregate demand = 2.5 × $20 billion

or

Increase in aggregate demand = $50 billion

Hence.

the correct answer is option (D) $50 billion.

5 0
3 years ago
Question 1 of 10
Mumz [18]
A……………………………….,….. AAA
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3 years ago
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Item 13 assume markup percentage equals desired profit divided by total costs. what is the correct calculation to determine the
xz_007 [3.2K]

The calculation to determine the dollar amount of the markup per unit: Total cost per unit times markup percentage per unit.

Total cost, in economics, is the sum of all costs incurred by a company in generating a certain stage of output. Knowledge of the full fee involved in producing their output lets a business have better knowledge of their profitability and efficiency. This may allow an organization to determine whether or not they want to reevaluate their pricing approach, reduce expenses or take different steps to grow their profitability.

Markup percentage is a percent markup over the cost fee to get the promoting price and is calculated as a ratio of gross income to the price of the unit. The amount of markup allowed to the store determines the money he makes from promoting each unit of the product. Better the markup, extra the price to the purchaser, and extra the cash the store makes.

Learn more about Total cost here brainly.com/question/14332852

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8 0
2 years ago
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