Answer:
$710.84 million
Explanation:
Net income = $35 million
Depreciation = $20 million
Capital expenditures = $7 million
Tax rate = 21%
D/E ratio = 0.4
Growth rate = 6%
Equity beta = 1.25
So, firm's asset beta = Equity beta/(1 + D/E*(1-T))
= 1.25/(1 + 0.4*(1-0.21))
= 0.94985
So, Free Cash Flow to the Firm= NI + Depreciation - Capital expenditures
= 35 + 20 - 7
= $48 million
Risk free rate Rf = 5%
Market risk premium = 7.5%
So, firm cost of capital using CAPM is Rf + Beta*(MRP)
Kc = 5 + 0.94985*7.5
Kc = 12.1239
So, Firms value using constant dividend growth model:
FV = FCF*(1+g)/(Kc-g)
FV = 48*1.06 / 0.121239-0.06
FV = 50.88 / 0.061239
FV = 830.8430901876255
FV = $830.84 million
Debt = $120 million
Market Value of equity = FV - Debt
Market Value of equity = $830.84 million - $120 million
Market Value of equity = $710.84 million
Answer:
An industrial market
Explanation:
Corning, Inc., which transforms an exotic blend of materials to create optical fiber capable of carrying much of the telephone traffic in the United States on a single strand, is operating in an industrial market. They are dealing in B2B market where the product made by them will be used on a larger scale in the entire US. B2B market is totally different from B2C market where we deal with the individual customers. But in industrial market we deal with the business market where they use the product in making their own products.
Answer:
Club membership fee of $60 would maximize profit.
If the club charges tow part pricing the maximum revenue can be $3500.
Explanation:
Joe has entered into a monopoly because he is owner of single golf course in the Northlands.
Demand function for Joe's golf course is:
P = 160 - 2q
P = $20 , q = 50
160 - 2 (50) = 60
Consumer surplus = 0.5 * equilibrium quantity
Consumer Surplus for Joe is ; 0.5 * 50 (160 - 20) = $3500
If MR = MC then demand function will become :
160 - 4q
If q = 25 then
160 - 4 * 25 = 60
Answer:
False
Explanation:
Lenny should try to mitigate or lower his damages by seeking another tenant and renting the apartment as soon as possible.
Lenny is entitled to use Madison's security deposit to cover all the possible damages generated by her contract breach, and if necessary he could sue her if the damages were too large.
Generally most landlords will not sue their tenants because unless the damages are too large, usually the security deposit should cover most of them. Filing a lawsuit costs money and if the loss is not significant enough, it is not worth it.
<span>asset turnover ratio is the ratio of the value of a company's sales or revenues generated relative to the value of its assets. The Asset Turnover ratio can often be used as an indicator of the efficiency with which a company is deploying its assets in generating revenue.
Given that the sales is 60k and the value of the asset is 370k, the ratio is simply the sales / value of assets which is 60/(370-88).</span>