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tatiyna
3 years ago
13

EMC Corporation has never paid a dividend. Its current free cash flow of $490,000 is expected to grow at a constant rate of 4.4%

. The weighted average cost of capital is WACC = 13%. Calculate EMC's estimated value of operations. Do not round intermediate calculations. Round your answer to the nearest dollar.
Business
1 answer:
disa [49]3 years ago
7 0

Answer:

$5,697,674

Explanation:

Dividend Valuation method is used to value the operations of a company based on the dividend paid, its growth rate and rate of return/WACC. The price is calculated by calculating present value of future dividend payment.

Free cash flow is the residual cash flow of operation after paying the capital expenditure from net income of the company. It represent the cash from the operations.

Formula to calculate the value of operation

Value of Operations = FCF / ( WACC - growth rate )

Value of Operations = $490,000 / ( 13% - 4.4% )

Value of Operations = $5,697,674

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3 years ago
Quentin's total debt to equity ratio on December 31, 2014, is _______
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Answer:

Quentin's total debt to equity ratio on December 31, 2014, is <u>0.62</u>.

Explanation:

Note: This question is not complete. The complete question is therefore provided before answering the question. See the attached file for the complete question.

The explnation to the answer is therefore given as follows:

The debt-to-equity ratio refers to a financial ratio that is used to measure the relative proportion of debt and Owners' equity that are employed to finance assets of a company.

The debt-to-equity ratio using the following formula:

Debt-to-equity ratio = Total liabilities / Owners' equity ............... (1)

Where;

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Substituting the value into equation (1), we have:

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Download pdf
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Answer:

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