FCF is projected to be $100,000, $125,000 and $150,000 over the next three years. The enterprise value in three years is projected to be $1,000,000. The WACC is 8%. What is the total enterprise value of the firm? If this firm has borrowed $500,000, the value of the firm's equity must be what? Show your work.
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- A private equity firm is aiming to buy a company. Under private equity ownership, the company will earn an annual cash flow of $10mln up to infinity. The first cash flow is expected next year. The estimated IRR is 13%. What is the investment outlay (in millions) closest to?If An investment costs $23,958 and will generate cash flow of $6,000 annually for five years. The firm's cost of capital is 10 percent? a. What is the investment's internal rate return? Based on the net present rate return, should the firm makeinvestment? b.What is the investment's net present value? Based on the net present value, should the firm make the investment?You have been offered a unique investment opportunity. If you invest $9,500 today, you will receive $475 one year from now, $1,425 two years from now, and $9,500 ten years from now. a. What is the NPV of the opportunity if the cost of capital is 5.2% per year? Should you take the opportunity? b. What is the NPV of the opportunity if the cost of capital is 1.2% per year? Should you take it now? C a. What is the NPV of the opportunity if the cost of capital is 5.2% per year? If the cost of capital is 5.2% per year, the NPV is $. (Round to the nearest cent.) Should you take the opportunity? (Select from the drop-down menu.) You take this opportunity. b. What is the NPV of the opportunity if the cost of capital is 1.2% per year? If the cost of capital is 1.2% per year, the NPV is $ Should you take it now? (Select from the drop-down menu.) You take this opportunity at the new cost of capital. (Round to the nearest cent.)
- You have been offered a unique investment opportunity. If you invest $8,900 today, you will receive $445 one year from now, $1,335 two years from now, and $8,900 ten years from now. a. What is the NPV of the opportunity if the cost of capital is 6.7% per year? Should you take the opportunity? b. What is the NPV of the opportunity if the cost of capital is 2.7% per year? Should you take it now?You see an opportunity to invest $1 million in a business. The investment is expected to generate a cash flow of $250000 per year over the next five years. Assuming a discount rate is 5%, would it be a sound decision to invest in this business?You have been offered a unique investment opportunity. If you invest $9,400 today, you will receive $470 one year from now, $1,410 two years from now, and $9,400 ten years from now. a. What is the NPV of the opportunity if the cost of capital is 6.5% per year? Should you take the opportunity? b. What is the NPV of the opportunity if the cost of capital is 2.5% per year? Should you take it now? a. What is the NPV of the opportunity if the cost of capital is 6.5% per year? If the cost of capital is 6.5% per year, the NPV is $. (Round to the nearest cent.)
- You are considering an investment in a clothes distributer. The company needs $106,000 today and expects to repay you $124,000 in a year from now. What is the IRR of this investment opportunity? Given the riskiness of the investment opportunity, your cost of capital is 15%. What does the IRR rule say about whether you should invest? What is the IRR of this investment opportunity? The IRR of this investment opportunity is %. (Round to two decimal places.)Can I get help with....A Security Company produces a cash flow of $210 per year and is expected to continue doing so in the infinite future. The cost of equity capital is 15 percent, and the firm is financed entirely with equity. Management would like to repurchase $100 in shares by borrowing $100 at a 10 percent annual rate (assume that the debt will also be outstanding into the infinite future). Using Modigliani and Miller’s Proposition 1 answer the following questions.What is the value of the firm today? Value of the firm $enter the dollar value of the firm What is the value of equity after the repurchase? Value of the equity $enter the dollar value of the equity What will be the rate of return on common stock required by investors after the stock repurchase? (Round answer to 2 decimal places, e.g. 17.54%.) Rate of return on common stock enter the rate of return on common stock in percentages rounded to 2 decimal places %1. You have an opportunity to invest $109,000 now in return for $79,500 in one year and $29,900 in two years. If your cost of capital is 8.8%, what is the NPV of this investment? The NPV will be $__________________(Round to the nearest cent.)
- A new business requires a $20,000 investment today and will generate a one-time cash flow of $25,000 after one year. The business will be financed with 50% equity and 50% debt. If the firm can borrow at 7%, what is the return on levered equity? 18% 39% O 7% O 43%A firm will earn a taxable net return of $500 million next year. If it took on debt today, it would have to pay creditors\varepsilon(rDebt) = 5% + 10% x wDebt2. Thus, if the firm has 100% debt, the financial markets would demand 15% expected rate of return. Further, assume that the financial markets will lend the firm capital at this overall net cost of 15%, regardless of how the firm is financed. The firm is in the 25% marginal tax bracket. 1. If the firmis fully equity-financed, what is its value? 2. Using APV, if the firm is financed with equal amounts of debt and equity today, what is its value? 3. Using WACC, if the firm is financed with equal amounts of debt and equity today, what is its value? 4. Does this firm have an optimal capital structure? If so, what is its APV and WACC?You have an opportunity to invest $50,100 now in return for $59,800 in one year. If your cost of capital is 8.2%, what is the NPV of this investment? The NPV will be $_______ (Round to nearest cent)