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
Firdavs [7]
3 years ago
10

Charles Underwood Agency Inc.’s FCFs are expected to grow at a constant rate of 3.90% per year in the future. The market value o

f Charles Underwood Agency Inc.’s outstanding debt is $85,154 million, and its preferred stocks’ value is $47,308 million. Charles Underwood Agency Inc. has 450 million shares of common stock outstanding, and its weighted average cost of capital (WACC) equals 11.70%.
Calculate the total firm value.
Business
1 answer:
alisha [4.7K]3 years ago
6 0

The following information is missing:

net operating after tax cash profit = $17,400 million

net capital expenditures = $2,610 million

net operating working capital increase of = $30 million

Answer:

$189,231 million

Explanation:

growth rate of future cash flows = 3.90%

WACC = 11.70%

OFCF₁ = $17,400,000,000 - $2,610,000,000 - $30,000,000 = $14,760,000,000 or $14,760 million

to determine the firm's total value we can use the operating free cash flow method:

firm's total value = operating free cash flow₁ / (WACC - growth rate) = $14,760 million / (11.70% - 3.90%) = $189,230.77 or $189,231 million

A firm's total value includes the market value of its debt and equity.

You might be interested in
Today, if John’s computer stops operating correctly, he probably calls a computer repair technician to fix it. The computer repa
kotykmax [81]

Answer:

Organic Solidarity

Explanation:

Based on the information provided within the question it can be said that this is an example of a term known as Organic Solidarity. This term explains the union in society from individuals depending on one another in advanced societies, where this interdependence usually occurs from the specialization of work between individuals. Such as John needing to depend on a computer repair technician to fix his computer.

7 0
3 years ago
Read 2 more answers
In each of the following cases, determine how supply or demand shifts and how the equilibrium changes.
kupik [55]

Explanation:

A. When microchip used in smartphones become less costly to produce, the supply of smartphones are going to increase, causing a fall in equilibrium price and a rise in equilibrium quantity.

since one of the resources used to make smartphones has become cheaper, more smartphones would be produced, raising its supply, increased supply causes fall in price and rise in equilibrium quantity.

B. since the ALS bucket challenge went viral, supply and demand for research would increase, causing equilibrium price or opportunity cost to either rise or remain unchanged. the equilibrium quantity will then rise, fall or remain unchanged

7 0
3 years ago
for a monopolist: a. price equals average total cost. b. price is above marginal revenue. c. marginal revenue equals zero. d. ma
strojnjashka [21]

For a monopolist b. price is above marginal revenue.

<h3>What Is Marginal Revenue? </h3>

Marginal revenue can be regarded as  increase in revenue which is been gotten from  the sale of one additional unit of output.

As a monopolist that is the the only seller in the market, then their marginal revenue is usually above price because they don't have a competitor that is close enough.

Read more on Marginal Revenue here:

brainly.com/question/12231343

#SPJ11

8 0
2 years ago
Laura is a gourmet chef who runs a small catering business in a competitive industry. Laura specializes in making wedding cakes.
mars1129 [50]

Answer:

The correct answer is the letter a. "Make more than 20 wedding cakes a month."

Explanation:

To maximize profit the marginal price of each cake must equal the marginal cost of each cake. The marginal cost is 300 and the marginal price is 5000/20 = 250. The marginal price of each cake (250) is less than the marginal cost of each cake (300), so Laura needs to make more than 20 cakes to increase her revenue and maximize her profit.

5 0
3 years ago
Under the allowance method, bad debts expense is recorded with an adjustment at the end of each accounting period that debits th
Crank

Answer:

Dr. Allowance for Doubtful Accounts...1,200

Cr. Accounts Receivable....................................1,200

Explanation:

When a specific customer's account is identified as uncollectible, the journal entry to write off the account is:

A credit to Accounts Receivable (to remove the amount that will not be collected)

A debit to Allowance for Doubtful Accounts (to reduce the Allowance balance that was previously established)

Therefore the JOURNAL ENTRIES for the $1,200 uncollectible debt will be

Dr. Allowance for Doubtful Accounts...1,200

Cr. Accounts Receivable....................................1,200

8 0
3 years ago
Other questions:
  • All else equal, a firm would prefer to have a higher gross margin. <br> a. True <br> b. False
    12·1 answer
  • Western Company allocates $10.00 overhead to each unit produced. The company uses a plantwide overhead rate with machine hours a
    14·1 answer
  • ____ is not a characteristic common to all organizations. Select one: a. Equal authority and responsibility b. Common goal or pu
    5·1 answer
  • Kathy and Annise are a married couple who file jointly. In the current year, they have net ordinary income of $10,000 from a par
    12·1 answer
  • Because customer preferences must be considered, _____ plays an important role in product-line decisions.
    15·1 answer
  • Qualitative characteristic being employed when companies in the same industry are using the same accounting principles. select a
    12·1 answer
  • The present value of the following cash flow stream is $8,250 when discounted at 8.7 percent annually. What is the value of the
    15·1 answer
  • Rather than have the top level of management make all the decisions, Jake's company gives all lower-level managers the authority
    9·1 answer
  • Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a book value of $47,000 and a
    15·1 answer
  • Alex purchases a computer from dell to be delivered via fed ex. Dell delivers the computer to fed ex to be shipped to alex. Duri
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!