The Free Cash Flow model has the following advantage over the Dividend Growth model:In the case of variable growth, it does not require the calculation of any horizon value.It can be applied even if growth rates are unknown.It can be applied to companies with variable growth in the initial years that eventually settle down to afixed rate of growth for the long term.It can be applied to divisions of companies.O It does not require any forecasting.

For valuation of equity, which is carried out frequently in corporate finance as well as financial…

Answered: The Free Cash Flow model has the…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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You are the managerial accountant at Infostore, a manufacturer of hard drives. Its reporting year-end is December 31. The chief financial officer is concerned about having enough cash to pay the expected income tax bill because of poor cash flow management. On November 15, the purchasing department purchased excess inventory of raw materials in anticipation of rapid sales growth beginning in January. The chief financial officer tells you to record the purchase of raw materials as an expense in the current year; this would decrease the company’s tax liability by increasing expenses and reducing income. Required In which account should the purchase of raw materials be recorded? How should you respond to this request by the chief financial officer?
In the United States, the capital share of GDP is about 30 percent; the average growth in output is about 3 percent per year; the depreciation rate is about 4 percent per year, and the capital-out- pút ratio is about 2.5. Suppose that the produc- tion function is Cobb-Douglas, so that the capi- tal share in output is constant, and that the United States has been in a steady state. a. What must the saving rate be in the initial steady state? [Hint: Use the steady-state rela- tionship, sy = (8 + n + g)k.]
The type of budgeting technique that requires items to be justified from the beginning without regarding the expenditure in the past is called: Answer Choices: a. Incremental budgeting b. Operating budgeting c. Rolling budgeting d. Zero-based budgeting
Mr. Johnnie B. Good has a furniture business which he operates as a sole proprietor. The business has been doing well for several years and now he wants to finance the expansion of his business by way of a loan and he is thinking of approaching BCN Bank accordingly. He is also planning to buy a great deal of raw material on credit from Miller’s Hardware in support of the business expansion. Mr. Good in looking at the potential risks to his personal assets and in an effort to safeguard himself from losing his personal assets if the business failed and was not able to repay the loan or pay for the material he got on credit, filed the relevant documents with the companies office and incorporated a private company, Good Furniture Ltd, with him as the sole shareholder and director and then went ahead and obtained a loan in the company’s name from the bank and bought the raw material on credit on behalf of the company. The bank in providing the loan ensured that Mr. Good signed a personal…
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I need solution of 2.34 as possible as please
Which of the following is not true about Christopher Pissarides: O He studies equilibrium in labor markets with search frictions. O He received the Nobel Prize in Economics O He discovered the Black-Scholes formula for unemployment. O He is a professor of economics at the London School of Economics.
7:17 PM O A D Å ןה.ןא 288 I31) B/s Reserve Board interest-rate increases. Create a spreadsheet to compare the difference in monthly payments for a K552,451 loan having 60 monthly payments for a select number of interest rates. Use 3% as the base APR and go as high as an APR of 12%. Required: Make your spreadsheet flexible enough to be able to look at the impact of the different interest rates for different loan amounts and different repayment periods. Question Two (Evaluating Projects/probabilistic analysis) Malama's Cafe, Inc., is considering investment in two alternative capital budgeting projects. Project A is an investment of ZMK75000 to replace working but obsolete refrigeration equipment. Project B is an investment of ZMK 150000 to expand dining room facilities. Relevant cash flow data for the two projects over their expected 2-year lives are as follows: PROJECT A YEAR ONE YEAR TWO Probability Cash Flow Probability Cash Flow 0.18 ZMK O 0.08 ZMK O ZMK 50,000 ZMK 100, 000 0.64 0.84…
create a response to the followig The fixed budget is continual and constant, and under any given circumstances this budget will never change. A fixed budget is not flexible, and a fixed budget is very straightforward. When we look at the value of a fixed budget does not fluctuate based on increases or decreases in revenue, or if there is an increase in operating costs. The fixed budget’s value is determined once it is assigned to the balance sheet without change. A fixed budget will be assigned for a precise time that is shown in the organization’s budget plan (Van Baal &Meltzer 2016). The fixed budget does not show any unpredictability based on the organization’s activity (Van Baal &Meltzer 2016). When we look at a flexible budget, there is a huge difference. A flexible budget is defined as a budget based on the static budget assumptions but adjusted to reflect realized volume (Reiter & Song 2021). A flexible budget can and will be changed to meet the needs of the…
What is the relative tax advantage of corporate debt if the corporate tax rate is Tc=0.21 , the personal tax rate on interest is TpD=0.37 , but all equity income is received as capital gains and escapes tax entirely ( TpE=0 )? How does the relative tax advantage change if the company decides to pay out all equity income as cash dividends that are taxed at 20%? Note: Do not round intermediate calculations. Round your answers to 4 decimal places.
How can we execute the Solver and interpret results from the reports provided by the program
Situation SteelCo is a large steel manufacturing company established several decades ago. Historically, Steel Co grew largely via mergers and acquisitions of smaller companies occupying adjacent or complementary market niches and underwent a number of corporate restructurings. Presently, at the highest level the company is split into two major divisions: Division Alpha and Division Beta. Both divisions are governed from the lean central head office and report their quarterly financial indicators to top business executives for their consideration. However, operationally these divisions represent essentially independent businesses with non-overlapping suppliers, products, customers and markets. Each division is managed by an appointed executive director reporting directly to C- level corporate leadership. Divisions are free to set their own agendas, pursue their own competitive strategies and make their own investment decisions, though major investments must seek approval at the…

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