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Finance
You have the following data: FCF0 = $10 million; FCF1 = $15 million; FCF2 = $20 million; FCF3 = $25 million; free cash flow grows at a rate of 5% for year 4 and beyond. The weighted average cost of capital is 15%. Assume they have 40 million in debt and 10 million shares outstanding. Find the price per share.
Finance
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Determine appropriate insurance coverage by investing options for life, health and disability.
I am 29, my husband is 30 and we have three kids six and under.
Determine appropriate insurance coverage by investing options for life, health and disability.
I am 29, my husband is 30 and we have three kids six and under.
Finance
The XYZ Company has an expected profit margin of 10 percent, turnover ratio of 1.8 and a leverage ratio of 0.30. The leading EPS is $2.50 and the firm uses a dividend payout ratio of 35 percent. The required return on firms with XYZ's risk characteristics is 5 percent. Calculate the expected current stock price of XYZ.
Finance
Great Woods sells specialty equipment for mountain climbers. Its sales for last year included $238,000 of tents and $411,000 of climbing gear. For next year, management has decided to sell specialty sleeping bags also. As a result of this change, sales projections for next year are $254,000 of tents, $426,000 of climbing gear, and $51,000 of sleeping bags. How much of next year's sales are derived from the side effects of adding the new product to its sales offerings?
A. $0
B. $15,500
C. $31,000
D. $51,000
E. $82,000
A. $0
B. $15,500
C. $31,000
D. $51,000
E. $82,000
Finance
The Golf Range is considering adding an additional driving range to its facility. The range would cost $76,000, would be depreciated on a straight line basis over its 7-year life, and would have a zero salvage value. The anticipated income from the project is $34,000 a year with $14,400 of that amount being variable cost. The fixed cost would be $16,200. The firm believes that it will earn an additional $13,000 a year from its current operations should the driving range be added. The project will require $2,000 of net working capital, which is recoverable at the end of the project. What is the internal rate of return on this project at a tax rate of 34 percent?
A. 7.53 percent
B. 9.29 percent
C. 11.47 percent
D. 12.68 percent
E. 14.04 percent
A. 7.53 percent
B. 9.29 percent
C. 11.47 percent
D. 12.68 percent
E. 14.04 percent
Finance
Outdoor Sports is considering adding a miniature golf course to its facility. The course would cost $138,000, would be depreciated on a straight line basis over its 5-year life, and would have a zero salvage value. The estimated income from the golfing fees would be $72,000 a year with $24,000 of that amount being variable cost. The fixed cost would be $11,600. In addition, the firm anticipates an additional $14,000 in revenue from its existing facilities if the golf course is added. The project will require $3,000 of net working capital, which is recoverable at the end of the project. What is the net present value of this project at a discount rate of 12 percent and a tax rate of 34 percent?
A. $11,309
B. $11,628
C. $12,737
D. $14,439
E. $14,901
A. $11,309
B. $11,628
C. $12,737
D. $14,439
E. $14,901
Finance
The Blue Lagoon is considering a project with a five-year life. The project requires $110,000 of fixed assets that are classified as five-year property for MACRS. Variable costs equal 71 percent of sales, fixed costs are $9,600, and the tax rate is 35 percent. What is the operating cash flow for year 4 given the following sales estimates and MACRS depreciation allowance percentages?
Year 1 2 3 4 5
sales 28,000 34000 39000 22000 7000
MACRS 20.00 32.00 19.20 11.52 11.52
A. -$1,806
B. $640
C. $1,809
D. $2,342
E. $2,811
Year 1 2 3 4 5
sales 28,000 34000 39000 22000 7000
MACRS 20.00 32.00 19.20 11.52 11.52
A. -$1,806
B. $640
C. $1,809
D. $2,342
E. $2,811
Finance
. Rock Haven has a proposed project that will generate sales of 1,680 units annually at a selling price of $22 each. The fixed costs are $12,700 and the variable costs per unit are $5.95. The project requires $28,000 of fixed assets that will be depreciated on a straight-line basis to a zero book value over the 4-year life of the project. The salvage value of the fixed assets is $6,900 and the tax rate is 34 percent. What is the operating cash flow for year four?
A. $11,794
B. $12,417
C. $14,258
D. $16,348
E. $16,971
A. $11,794
B. $12,417
C. $14,258
D. $16,348
E. $16,971
Finance
Metal makers, inc purchased some welding equipment 6 years ago at a cost of 579000. today, the company is selling this equipment for 110,000. the tax rate is 34 percent. what is the after tax cash flow from this sale? the MACRS allowances percentage are as follows commencing with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93 and 4.46 percent.
A.81,380
B.95,220
C.98,960
D.101,540
E.110,000
A.81,380
B.95,220
C.98,960
D.101,540
E.110,000
Finance
Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 37% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company's last dividend, D, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?
a. $39.57
b. $49.37
c. $40.80
d. $42.02
e. $43.25
a. $39.57
b. $49.37
c. $40.80
d. $42.02
e. $43.25
