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
Zanzabum
2 years ago
6

Danielsen's has 15,000 shares of stock outstanding and projected annual free cash flows of $48,200, $57,900, $71,300, and $72,50

0 for the next four years, respectively. After that, the cash flows are expected to increase at a constant annual rate of 1.6 percent. What is the current value per share of stock at a discount rate of 15.4 percent
Business
1 answer:
Stolb23 [73]2 years ago
6 0

Answer:

$31.57 per share

Explanation:

Terminal Value (TV) = CF5(1 + g) / (Ke – g)

= $72,500*(1 + 0.0160) / (0.1540-0.0160)

= $73,660 / 0.1380

= $533,768

Year   Cash Flow    PVF at 15.40%     PV of Free Cash Flow

1           48,200          0.866551                       41,768

2          57,900          0.750911                        43,478

3          71,300           0.650703                      46,395

4          72,500          0.563867                      40,880

4        533,768          0.563867                      <u>300,974</u>

                                    TOTAL                        <u>473,495</u>

<u />

The current value per share of stock = Total Present value of future cash flows / Number of shares outstanding

= $473,495 / 15,000 shares outstanding

= $31.57 per share

You might be interested in
What would you predict if you had first mixed the catalase (100%) in serial solutions of varying phs of 3, 5, 7, 9, 11? what wou
lana [24]
<span>The optium pH level would be an average of these pHs, which is 7. 7 is also the mean, but the solutions of varying pH would eventually neutralize to 7.</span>
5 0
3 years ago
Vaughn Manufacturing's prepaid insurance was $197000 at December 31, 2021 and $90300 at December 31, 2020. Insurance expense was
Zina [86]

Answer:

Cash disbursements for insurance would be $ 168,700.

Explanation:

In accrual based accounting expenses are recorded when they are incurred. The payment against item purchased does not make it qualified to be recorded as expense. Any advance payment made is recognize as asset untill performance obligation has been completed. So in order to determine amount of payment we will use following accounting equation.

Payments = Prepaid current period + expenses - opening prepaid balance

Payments = 197,000 + 62,000 - 90,300 = $ 168,700

8 0
3 years ago
During the adjusting process two transactions were missed. The first is for unearned rent revenue of which $450 was earned durin
masya89 [10]

Answer:

3. net income is understated by $175

Explanation:

There were two transactions omitted. The first transaction is unearned rent revenue of which $450 was earned. This earned rent revenue increases income by $450. While the second transaction was accrued interest payable of which $275 is owed. This interest payable increases liabilities by $275.

Therefore, from the above, income or revenue is understated by $450, while expenses is understated by $275.

Therefore, net income is understated by income less expenses, thus 450 - 275 = $175. This also implies that liabilities are overstated by $175.

4 0
3 years ago
If the federal reserve banks mailed everyone in the United States a new $1000.00 bill, what would happen to prices, output, and
Artemon [7]

If the Fed mailed everyone a $1,000, the effect would be a <u>rise in prices, </u>output, and income.

<h3 /><h3>What happens when money is injected into the economy?</h3>

The Equation of exchange is:

<em>Money supply x Velocity of money = Price level x Quantity of goods and services produced </em>

If the Money supply increases like it will when $1,000 is sent by the Fed to people, the velocity will also rise as people purchase more goods and services.

The Price level and the Quantity produced on the right side of the equation would also have to rise to match the left side. So prices would rise, and so would output.

Find out more on the equation of exchange at brainly.com/question/10110078.

#SPJ1

4 0
1 year ago
Ahmad owns an apartment building and has recently had to lower the rent he charges, not only to attract new tenants but also to
Yanka [14]

Answer: Interest rate risk

Explanation:

Interest rate risk is described as the potential for investment loss which result from a change in interest rates. The increase in interest rate declines tell value if a bond or other fixed-income investment, the change that occurs in these bond price is known as duration. Generally, it is the risk that arises for bond owners from fluctuating interest rates. The interest rate risk of a bond depends on how sensitive it's price is to interest rate changes in the market

5 0
3 years ago
Other questions:
  • Under the Texas penal code
    14·1 answer
  • What is an asset? A. A source of revenue B. An item you want to purchase with a credit card C. A source of funding D. Something
    14·2 answers
  • Which of the following statement is TRUE about variable expenses?
    8·1 answer
  • Mixed drink containing two shots of 80 proof liquor should be counted as more than one standard drink true or false
    7·1 answer
  • Which of the following is generally not one of the five processes integrated into an enterprise project management methodology?
    11·1 answer
  • PLEASE HELP ME ILL MAKE YOU BRAINLIEST
    9·2 answers
  • there might be times your boss allows you to work from home.having the permission to work from home,you just took some office su
    15·1 answer
  • The fundamental principle of insurance underwriting is that the cost of health care can be predicted for:___.
    6·1 answer
  • Suppose that an Exxon Mobil bond has a return of ​% half the time and ​% the other half. The expected return on this bond is   
    12·1 answer
  • Predictors and Effects of Participation in Peer Support: A Prospective Structural Equation Modeling Analysis
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!