A claim against a customer is known as

Standard, Inc. reported EBIT of $35 million for last year. Depreciation expense totaled $20 million and capital expenditures cam

aleksandr82 [10.1K]

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

6 0

3 years ago

Band Instruments, Inc., sells seventy-six trombones to Community & School Band Source, Inc. To avoid liability for most impl

choli [55]

Answer:

A) as is

Explanation:

If someone sells you any product "as is" then you should be careful because they are trying to avoid giving you any type of warranty that the product will function properly. For example if I sell you my car "as is", then I'm not responsible if the engine breaks down after you only drive it for 10 yards.

3 0

3 years ago

Dean, the president of Billing & Credit Company, promises to pay his employee Ewing, who is dangerously obese, $10 for every

Aliun [14]

Answer:

See the explanation below.

Explanation:

The court likely to rule in favor of Ewing.

The reason is that the enough consideration that gives backing to a promise in this case is generally the waiver of a legal right to eat to obesity as requested by the other party.

The evidence that Ewing has lost 154 pounds in weight over the stipulated period is a consideration that sufficient enough under the law. The payment of $10 pound that Ewing has lost is a promise. The fact that Ewing also benefit from the weight loss does not matter.

4 0

3 years ago

Raymond owns an Accidental Death and Dismemberment Policy with a principal sum of $50,000, and a capital sum of $25,000. After o

schepotkina [342]

Answer:

He will get nothing from the Accidental Policy.

Explanation:

Raymond owns an Accidental policy but he Dies from Coronary artery disease. according to insurance companies policy, he will get nothing when he is dead by any means other than by accident.

Insurance companies have their own regulations and policy.

The insurance company is liable to pay for the incident for which the insurance is taken.

6 0

3 years ago

Bob can afford car payments of $365 per month for 5 years. If the interest rate is 4.9 percent, how much money can he afford to

tester [92]

Based on an interest rate of 4.9% per year and a monthly payment of $365 for 5 years, Bob can afford to borrow $19,388.64 today.

<h3>What is the present value?</h3>

The present value is the discounted value of future cash flows. It can be computed by using an online finance calculator as follows or the annuity present value formula.

<h3>Data and Calculations:</h3>

N (# of periods) = 60 (5 years x 12 months)

I/Y (Interest per year) = 4.9%

PMT (Periodic Payment) = $365

FV (Future Value) = $0

P/Y (# of periods per year) = 12

C/Y (# of times interest compound per year) = 12

Results:

PV = $19,388.64

Sum of all periodic payments = $21,900 ($365 x 60)

Total Interest = $2,511.36

Thus, based on the given facts, Bob can afford to borrow $19,388.64 today.

Learn more about the present value calculations at brainly.com/question/20813161

4 0

3 years ago