• Meedooo
    average cost of capital is 11%, what is the value of its operations? a. | $1,714,750 | b. | $1,805,000 | c. | $1,900,000 | d. | $2,000,000 | e. | $2,100,000 | ____ 17. Zhdanov Inc. forecasts that its free cash flow in the coming year, i.e., at t = 1, will be –$10 million, but its FCF...
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  • Finance 4300
    : Increasing the expected growth rate of sales. • Question 9 7.692 out of 7.692 points Zhdanov Inc. forecasts that its free cash flow in the coming year, i.e., at t = 1, will be $10 million, but its FCF at t = 2 will be $20 million. After Year 2, FCF is expected to grow at a constant...
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  • Quiz 7
    Answer: Increasing the expected growth rate of sales. • Question 17 2 out of 2 points Simonyan Inc. forecasts a free cash flow of $40 million in Year 3, i.e., at t = 3, and it expects FCF to grow at a constant rate of 5% thereafter. If the weighted average cost of capital is 10...
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  • Financial Management and Capital Budgeting
    ) |   | = $100(1 + 0.05) / (0.15 – 0.05) = $105 / 0.1 = $1,050 | | | Correct Marks for this submission: 1/1. Question 8 Marks: 1 Zhdanov Inc. forecasts that its free cash flow in the coming year, i.e., at t = 1, will be –$10 million, but its FCF at t = 2 will be $20 million. After Year 2...
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  • Wacc
    years: NWC(year 0) = Current assets - current liabs = 50-20=30 FCF = EBIT(1 - t) + Dep - CAPX - ∆NWC Year 0 EBIT EBIT(1-t) NWC ∆NWC Depreciation CAPX FCF PV @ 13% Page 14 30 22.7 Year 1 20 13.2 33 3 5 10 5.2 Year 2 22 14.52 37 4 5 10 5.52 Year 3 25 16.5 41...
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  • financial management
    %, what is the value of its operations? a. $1,714,750 b. $1,805,000 c. $1,900,000 d. $2,000,000 e. $2,100,000 __B__ 17. Zhdanov Inc. forecasts that its free cash flow in the coming year, i.e., at t = 1, will be –$10 million, but its FCF at t = 2 will be $20 million. After Year 2, FCF...
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  • Fi515 Final Exam
    to Maturity=7.51% Cost of equity=4.5 + (5.5)X 1.2=11.1% WACC=.35x4.5+.65x11.1=8.79% 4. (TCO B) Leak Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 11% and FCF is expected to grow at a rate of 5% after Year 2, what is the Year 0 value of...
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  • Financial Management
    project? Free Cash Flows are: 0 = Net income + Overhead (after tax at 35%) + Depreciation – Capex – Inc. in NWC FCF b. 1 4,875 650 2,500 2 4,875 650 2,500 … 9 4,875 650 2,500 10 4,875 650 2,500 –10000 18,025 25,000 10,000 –35,000 8,025 8,025 … 8,025 NPV  35  8.025  11...
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  • Chapter 8 Finance
    1 $3,000 2 4,000 3 5,000 The analyst estimates that after three years (t = 3) the company’s free cash flow will grow at a constant rate of 6 percent per year. The analyst estimates that the company’s weighted...
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  • Valuation
    feasibly grow forever once it has stabilized (after 10 years). The value of the terminal year cash flows (that is, the value in year 10) is given by: FCF10 (1 + g) (rd - g) TY FCF The present value of the terminal year cash flows (that is, the value today) is given by: TY FCF (1 + rd) 10 PV (TY...
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  • B&M Slides
    ) 87 FCF and PV Example Given the cash flows for Concatenator Manufacturing Division, calculate the PV of near term cash flows, PV (horizon value), and the total value of the firm. r=10% and g= 6% Year AssetValue Earnings Investment Free CashFlow 1 2 3 4 5 6 10.00 12.00 14.40 17.28...
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  • Finance Exercise Handbook Solved
    a stock with EPS in the coming three years of €2 and then to grow at a constant rate forever. The company has to keep a target price-to-earnings ratio of 10 and a payout ratio of 30% after year 3. The stock beta is 1.2 and the market risk premium is 6%? P P⁄ P⁄ rg (r) P ⇔g r P P rg P We have a 3...
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  • Solutions
    ) ⎟ ⎜ (1.14 ) ⎟ 0.14 ⎜ (1.14 )10 ⎝ ⎠ ⎝ ⎠ ⎝ = −$64.816 200,000 ⎛ 11 − ⎜ (1+r )6 r ⎝ ⎞ ⎟ ⎟ ⎠ 6-7. OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship would cost $500 million, and would operate for 20 years. OpenSeas expects annual cash flows from operating the ship to...
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  • Fin 534
    repaid the loan at the end of one year, what was the total dollar annual cost of the revolver? a. $612,750 b. $645,000 c. $677,250 d. $711,113 e. $746,668 (Comp.) Working capital, FCF C S Answer: b HARD 102. Madura Inc. wants to increase its free cash flow by $180 million during the coming...
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  • 80 Common and Uncommon Errors in Company Valuation
    the expected FCFs at the WACC (10%) and assumed a constant growth of 2% after 2008. The valuation provided lines 1 to 7, and stated that the WACC was 1 The (D/E) ratios must be calculated using the values obtained in the valuation. 6 80 common and uncommon errors in company valuation...
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  • Google Initiating Report
    expected to grow 15.1% annually, while the EMEA region is expected to grow 9.9 annually. 10 Google, Inc. Exhibit 11: International Online Advertising Spend US$ in millions, unless otherwise stated 28 September 2004 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 1999 2000 2001...
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  • FIN515
    rate of 6.5%, what is the future value of the following cash flow stream? Years: 0 1 2 3 4 | | | | | CFs: $0 $75 $225 $0 $300 a. $526.01 b. $553.69 c. $582.83 d. $613.51 e. $645.80 E E Your father paid $10,000 (CF at t = 0) for an investment that promises to pay $750 at the end of...
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  • miss
    difficulties. They estimate below their future free cash flows to the firm (FCFF) over the next 5 years. The figures are in £ millions. Year N+1 FCFF -20 N+2 10 N+3 15 N+4 18 N+5 20 The target Debt to Equity ratio is 3 and the market value of the current financial debt is 300...
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  • R&R Case
    projections to estimate the DCF value of Digital Everywhere. Assume that the terminal growth rate of 5%. Make sure that you show your Free Cash Flow for each year clearly. (I have posted an Excel file that has the exhibits from the case) 2. Based on Exhibit 2 estimate the Unlevered Beta (some time...
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  • Company Valuation Methods. the Most Common Errors in Valuations
    is a variant of the UEC’s method when the number of years tends towards infinity. In the case of the company Alfa Inc., B = 26; A = 135, i = 10%. With these assumptions, if t = 15%, the equity’s value would be 185 million dollars. 5. Cash flow discounting-based methods These methods seek to...
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