Does owning new clothes, shoes and the latest electronics mean that someone is rich? Explain.

Assume that today is December 31, 2019, and that the following information applies to Abner Airlines: After-tax operating income

melamori03 [73]

Answer:

The company's stock price today should be $71.17 per share.

Explanation:

The corporate valuation model approach can be used to estimate this by using the following steps:

Step 1: Calculation of the free cash flow

Free cash flow is the cash a firm generates after accounting for capital expenditure. This can be estimated using the following formula:

Free Cash Flow (FCF) = After-tax operating income + Depreciation expenses - Capital expenditure

For this question, we therefore have:

Free Cash Flow (FCF) = $700 + $150 - $375 = $475 million

Step 2: Calculation of Value of operations (Vo)

Vo = FCF / (WACC - FCF growth rate) = 475 / (11% - 7%) = $11,875 million

Step 3: Calculation of the Firm value

Firm value = Vo + Non-operating assets = $11,875 + $199 = $12,074 million

Step 4: Calculation of value of equity

Value of equity = Firm value - Debt = $12,074 - $3,534 = $8,540 million

Note: The correct amount of debt is $3,534 not $3.540 as mistakenly given, may be due to typographical error, in the question.

Step 5: Calculation of stock price per share today

Stock price per share = Value of equity / Number of shares outstanding = $8,540 / 120 = $71.17 per share

Therefore, the company's stock price today should be $71.17 per share.

7 0

3 years ago

SoldByAir provides drone services to the real estate industry, both residential and commercial. The purchasing manager is gettin

ladessa [460]

Answer:

The indifference point is 22,381 hours a year.

Explanation:

Giving the following information:

SecureAll:

Fixed costs= $900,000

In house:

Fixed costs= (100,000*4) + 30,000= $430,000

Variable costs= $21 an hour

First, we need to structure the cost formula for each option:

SecureAll= 900,000

In-house= 430,000 + 21*x

X= number of hours

Now, to calculate the indifference point, we need to equal both formulas and isolate X:

900,000= 430,000 + 21x

470,000/21= x

22,381= x

The indifference point is 22,381 hours a year.

8 0

3 years ago

How much tax do i pay if i make 100000 in california?

gizmo_the_mogwai [7]

29,208 I used a tax calculator

4 0

3 years ago

Read 2 more answers

The operating cycle of a company is the average time that is required to go from cash to.

gayaneshka [121]

A company's operating cycle refers to the average time that is required to go from cash to: cash in producing revenues.

<h3>What is an operating cycle?</h3>

An operating cycle can be defined as the average time that it takes a company or business organization to buy goods, sell these goods and generate revenue (cash) from the sales of the goods.

This ultimately implies that, an operating cycle is simply the average time that is required to go from cash to cash in producing revenues, especially from the sales of the goods.

Read more on here: brainly.com/question/16945776

3 0

2 years ago

If Sam's, a local watering hole, increased the price of a pint of Guinness by 20%, it estimates the number of MBA students purch

Leni [432]

Answer:

Total Revenues would increase because Demand is Inelastic

Explanation:

Demand is buyers ability & willingness to buy at a given price, time.

Elasticity of Demand is quantity demanded responsiveness to price change.

More Elastic Demand means quantity demanded responds highly to change in price. Percentage Change in Quantity Demanded > Percentage Change in Price. Elasticity of Demand [Δ%Q / Δ%P] >1 in this case. Price and Total Revenue (PxQ) are inversely related in this case ; i.e - price rise, TR fall & price fall, TR rise.

Less Elastic Demand means quantity demanded responds less to change in price. Percentage Change in Quantity Demanded < Percentage Change in Price. Elasticity of Demand [Δ%Q / Δ%P] < 1 in this case. Price and Total Revenue (PxQ) are positively related in this case ; i.e - price rise, TR rise & price fall, TR fall.

So: If Sam's Pint price change by 20% leads to demand fall by 4%, the demand is less elastic i.e < 1. Hence, Total Revenue will increase with increase in price.

6 0

3 years ago