Ms. Ga Ling projected the following data for GWAPO Corporation: (amounts in millions of Pesos) Year Revenue Cash Operating Expenses 1 50.00 30.00 2 55.00 33.00 3 60.50 36.30 4 66.55 39.93 5 73.21 43.92 The company owns a property originally acquired at P50,000,000 with useful life of 10 years. The terminal value is assumed based on the growth rate of the cash flows. Annual capital investment required is P2,000,000. Outstanding loans is P16,620,000. Income tax rate is 30%. How much is the intrinsic value of GWAPO Corporation if the required return for this business is 12%?

Ms. Ga Ling projected the following data for GWAPO Corporation: (amounts in millions of Pesos) Year Revenue Cash Operating Expenses 1 50.00 30.00 2 55.00 33.00 3 60.50 36.30 4 66.55 39.93 5 73.21 43.92 The company owns a property originally acquired at P50,000,000 with useful life of 10 years. The terminal value is assumed based on the growth rate of the cash flows. Annual capital investment required is P2,000,000. Outstanding loans is P16,620,000. Income tax rate is 30%. How much is the intrinsic value of GWAPO Corporation if the required return for this business is 12%?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 7E

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