![dillionmaggio](/avatars/25426.jpg)
dillionmaggio
30.03.2020 •
Business
The MoMi Corporation’s cash flow from operations before interest and taxes was $1.7 million in the year just ended, and it expects that this will grow by 5% per year forever. To make this happen, the firm will have to invest an amount equal to 17% of pretax cash flow each year. The tax rate is 21%. Depreciation was $230,000 in the year just ended and is expected to grow at the same rate as the operating cash flow. The appropriate market capitalization rate for the unleveraged cash flow is 12% per year, and the firm currently has debt of $3 million outstanding. Use the free cash flow approach to calculate the value of the firm and the firm’s equity.
Solved
Show answers
More tips
- H Health and Medicine How Many Ribs Do Humans Have?...
- H Health and Medicine Simple and Effective: How to Get Rid of Cracked Heels...
- H Health and Medicine Relieving Swelling in Legs: Causes and Ways to Alleviate the Symptom...
- W Work and Career Мерчендайзинг – все, что нужно знать...
- O Other Everything You Need to Know About Kudyabliks...
- F Food and Cooking How to cook crayfish? Everything you need to know...
- F Food and Cooking Homemade kvass: recipe and brewing process...
- H Health and Medicine How to Choose the Right Tanning Cream?...
- S Style and Beauty Secrets of Tying a Pareo: 5 Ways...
- S Sport Running: How to Do It Right?...
Answers on questions: Business
- B Business The competitive force of new entrants into an industry is weak when Multiple choice question. existing industry members are looking to expand their market reach by entering...
- B Business Which of the following is an example of a positive economic statement? Question 19 options: a) Corrupt politicians ought to be voted out of office. b) An increase in the...
- B Business In activity-based costing, the activity rate for an activity cost pool is computed by dividing the total overhead cost in the activity cost pool by:...
- B Business g Mark quit his job as a salesman where he made $43,000 per year to start his own t-shirt making business. His business expenses are $6,000 per year on rent, $12,000 per...
- B Business Connor purchased an annuity that was to pay him a fixed amount each month for the remainder of his life. he began receiving payments in 2003, when he was 65 years old....
- B Business The current price of a stock is $22, and at the end of one year its price will be either $27 or $17. the annual risk-free rate is 6.0%, based on daily compounding. a 1-year...
- B Business Four friends want to take a vacation together, so each one gets a part-time job. each person has 8 weeks to save $720 for the vacation. analyze the four individual plans...
- B Business Find the after-tax return to a corporation that buys a share of preferred stock at $55, sells it at year-end at $55, and receives a $4 year-end dividend. the firm is in...
- B Business The magnolia swimming pool company wants to determine the average number of years it takes before a major repair is required on one of the pools that the company constructs....
- B Business Government c sponsors a public entity risk pool in which government c is also a participant. however, government c is not the predominant participant in the pool. for...
Ответ:
Value of the firm $ 14550000.
Value of the firm's equity$ 11550000.
Explanation:
Cash flow from operations = $ 1785000 (1700000 + 5 % of 1700000).
Depreciation = $ 241500. (230000 + 5 % of 230000).
Taxable income = $ 1543500 (1785000 - 241500)
Net income (after tax) = 1543500 - 30 % of 1543500 = $ 1080450.
Cash flow from operations (after tax) = 1080450 + 241500 (Depreciation, being non cash expense). = $ 1321950.
Free cash flow available = Cash flow from operations (after tax) - Income from investment.
= 1321950 - (1700000 * 17 % * 1.05)
= 1321950 - 303450.
= $ 1018500.
Value of the firm = Free cash flow available / (Capitalization rate - Growth rate)
= 1018500 / (0.12 - 0.05)
= 1018500 / 0.07
= $ 14550000.
Value of the firm's equity = Total value of firm - Value of debt of firm
= 14550000 - 3000000
= $ 11550000.
Ответ:
answer C
Explanation:
Gross Domestic Product (GDP) is the monetary value of all finished goods and services made within a country during a specific period. GDP provides an economic snapshot of a country, used to estimate the size of an economy and growth rate. GDP can be calculated in three ways, using expenditures, production, or incomes.