7. Assume that you have full year forecasted financials for 2019 - 2024 (planning period) and the following financials for after the planning period: • NOPAT (last year of planning period) = 90 • Long term growth rate = 2% • Long term ROCB = 11% • WACC = 8% What is the present value (at December 2018) of the terminal value of this company using the Key Value Driver Formula? Please round your answer to the nearest whole number and provide your answer in USD millions without a dollar sign (e.g. 100 instead of $100).
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- Current and projected free cash flows for Radell Global Operations are shown here. Growth is expected to be constant after 2020, and the weighted average cost of capital is 11%. What is the horizon (continuing) value at 2021 if growth from 2020 remains constant?Start with the partial model in the file Ch07 P25 Build a Model.xlsx on the textbook’s Web site. Selected data for the Derby Corporation are shown here. Use the data to answer the following questions. Calculate the estimated horizon value (i.e., the value of operations at the end of the forecast period immediately after the Year-4 free cash flow). Assume growth becomes constant after Year 3. Calculate the present value of the horizon value, the present value of the free cash flows, and the estimated Year-0 value of operations. Calculate the estimated Year-0 price per share of common equity.Net Income for Company A is $200,000 in 2014, $300,000 in 2015, $400,000 in 2016, $500,000 in 2017, and $600,000 in 2018. The expected growth for all years after 2018 is 5%, the 90-Day T-Bill Rate is 20%, and the appropriate percentage above risk-free rate is 12%. Using this information, what is Net Present Value? A. 412,020.21 B. 812,020.21
- Allam’s Corporation had the following figures in 2019: -Interest rate on loan debt is 14% -Tax Rate is 20% -Total liabilities are 2,000,000 -Total assets are 5,000,000 -Risk-free rate of return is 15% -Beta for the company is 1.2 -Average Market return is 25% The company is evaluating two projects; S & N that are expected to generate the following: Year S N 0 (500,000) (500,000) 1 240,000 170,000 2 230,000 200,000 3 190,000 250,000 4 140,000 290,000 Required: Calculate the Weighted Average Cost of Capital Using payback, discounted payback, and net present value techniques, which project would you recommend, if any?Calculate the Compounded Annual Growth rate (CAGR) of Salalah Macroni which has the following returns 2018-19 2019-20 Beginning value OMR 50 OMR 110 End of Year 1 OMR 65 OMR 135 End of Year 2 OMR 110 OMR 250 End of Year 3 OMR 200 OMR 290 End of Year 4 OMR 250 OMR 350 End of Year 5 OMR 280 OMR 400 Select one: a. Year 2018-19= 41.13% ; Year 2019-20 = 14% b. Year 2018-19= 41.13% ; Year 2019-20 = 29.45% c. Year 2018-19= 14.31% ; Year 2019-20 = 15% d. Year 2019-20 =19.50% ; Year 2020-21= 12.30% e. None of the optionsYou are valuing your business ready for its initial public offering. You have determined the most recent annual (2021) cash-flow to the firm, was $30 million. You expect that these cash-flows will increase at an 10% annual rate (g1) over the next two years. At the end of two years (the end of 2023), the cash-flow growth rate will drop to 5% per year (g2) in perpetuity. The firm’s WACC is 15%. Calculate the expected value of your firm.
- Assume that today is December 31, 2019, and that the following information applies to Abner Airlines: After-tax operating income [EBIT(1 - T)] for 2020 is expected to be $650 million. The depreciation expense for 2020 is expected to be $120 million. The capital expenditures for 2020 are expected to be $500 million. No change is expected in net operating working capital. The free cash flow is expected to grow at a constant rate of 7% per year. The required return on equity is 16%. The WACC is 9%. The firm has $199 million of non-operating assets. The market value of the company's debt is $4.177 billion. 250 million shares of stock are outstanding. Using the corporate valuation model approach, what should be the company's stock price today? Do not round intermediate calculations. Round your answer to the nearest cent. $ ?Sohar Video Products’ sales are expected to increase from OMR (10) million in 2020 to OMR (12) million in 2021. Asset turnover generated in the 2020 of (2.5) times. Sohar Company is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2020, current liabilities were OMR (2) million, the net profit was OMR (30) thousand, and the dividend payout ratio was 20%. Suppose the net profit margin (NPM) and dividend payout ratio (D%) will hold the same percentage in 2021. Is Sohar company needs fund from external or internal to finance the new sales in 2021? And why. (Note: - Kindly mention the equations that are related) ________________________________Suppose that the date is 1 January 2022, and you are considering making an investment in General Electric (NYSE: GE). You are given the following information and assumptions to assist you with your valuation analysis: FY2022 revenue (i.e., for the 12-month period from 1 January 2022 to 31 December 2022) is forecast to be $80 billion, compared to actual FY2021 revenue of $75 billion. EBIT, depreciation & amortization (D&A) and capital expenditure dedicated solely for new investments/projects (i.e., growth capital expenditure) is expected to remain fixed (as a percentage of total revenues) at 15%, 5% and 3% respectively. The level of operating working capital needed for GE’s ordinary business operations historically as well as in the future is equal to 1% of total revenues. GE currently has $75 billion in debt outstanding, $40 billion in cash on hand and 9 billion shares outstanding. Assume that GE faces an effective corporate tax rate of 25%. Assume that GE’s long-term…
- An Analyst is evaluating Quickie Inc. and shared the following projected net cash flows for the next 10 years. Year 1 1 000 000 Year 2 1 000 000 Year 3 1 150 000 Year 4 1 200 000 Year 5 1 200 000 Year 6 1 300 000 Year 7 1 500 000 Year 8 1 700 000 Year 9 2 000 000 Year 10 2 200 000 Quickie Inc. expects to continue to grow infinitely using CAGR of the 10- year forecast period. Required return relevant to the company is at 12%. What is the compounded annual growth rate of 10-yr net cash flow projection? What is the terminal value incorporated in the net cash flow to firm computation?Austin Grocers recently reported the following 2018income statement (in millions of dollars): For the coming year, the company is forecasting a 25% increase in sales, and it expects thatits year-end operating costs, including depreciation, will equal 70% of sales. Austin’s taxrate, interest expense, and dividend payout ratio are all expected to remain constant.a. What is Austin’s projected 2019 net income?b. What is the expected growth rate in Austin’s dividends?ABC Enterprise would like to evaluate/analyze a potential investment.. Given the following:Investment amount - 450,000 (2022)Dividends / Revenue stream - 100,000 for the first year and an interval of 5,000 for the succeeding years Discount rate - 14%a. NPV for the perio 2023 through 2029;b. Total NPV using manual computation;c. Total NPV using the Excel function; andd. IRR rate.