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Nataly_w [17]
3 years ago
15

Costco Wholesale Corp. has FCFE of $2.00 billion in the most recent year. The cash flows are expected to grow at the annual rate

of 3%. Costco has the weighted average cost of capital of 9% and the cost of equity of 12%. The book value of debt is $20.72 billion and the market value of debt is $24.44. Given these assumptions, which of the following is closest to the current firm value of Costco?
a. $47.3 billion
b. $43.6 billion
c. $58.8 billion
d. $46.7 billion
Business
1 answer:
Svetlanka [38]3 years ago
7 0

Answer:

a. $47.3 billion

Explanation:

The computation of the current value of the firm is as follows;

Value of Equity = FCFE × (1+ g ) ÷ (ke - g)

= $2 billion × (1 + 0.03) ÷ (0.12 - 0.03)

= $22.89 billion

Now  

Current Value of Firm = Market Value of equity + market Value of Debt

= $22.89 billion + $24.44 billion

= $47.3 billion

Hence, the current value of the firm is $47.3 billion

hence, the correct option is A.

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Answer:  Assets are listed in descending order of liquidity

Explanation:

According to accountant principles, the assets are always listed starting with the most liquid asset. It has the special purpose of helping to the shareholders and company owners to know what assets are easily sold and become in cash flow. The most liquid asset is always the cash, it is the first in the list. Commonly the second asset listed is the inventory, then we have ththe realizable value ( it includes bonds, stocks and other stock market elements), followed by the elements available for sell, at the end we can find listed long term resources including fixed assets and intangible assets.

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3 years ago
16. According to data from the U.S. Department of Energy, sales of the fuel-efficient Toyota Prius hybrid fell from 194,108 vehi
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Answer:

0.22 and substitutes goods

Explanation:

The computation of the cross-price elasticity of demand using mid point formula is shown below:

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where,  

Change in quantity demanded is

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= 180,603 - 194,108

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And, the average of quantity demanded is

= (180,603 + 194,108) ÷ 2

= 187,356

Change in price is

= P2 - P1

= $2.43 - $3.36

= -$0.93

And, the average of price is

= ($2.43 + $3.36) ÷ 2

= 2.895

So, after solving this, the cross - price elasticity is 0.22

Since the cross - price elasticity is positive that reflect the goods are substitutes to each other

4 0
3 years ago
Which result is a positive aspect of globalization
xxTIMURxx [149]
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g A joint product is: Select one: a. Any product which consists of several parts. b. Any product produced by a company with more
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Answer:

The correct answer is letter "D": One of several products produced from a common input.

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