What is LVMH's capital structure? If it has debt, will it be able to generate the future required cash flows to finance its debt? What is LVMH's plan for issuing debt in the future? 300 Words
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- Rachel the chief financial officer of sunrise fruit snakcs, needed to determine the compnays projected cost of capital for next year, to do so , wshe needed to know the following infomraiont expect a) the proejcted equity level for next year b) the projected intereset rate on next years debt The projected debt level for next year D0 the projected cash balance for next yearOn the basis of the financial information given in this case, complete the WACC table that is prepared for this project . What was the WACC for Atlassian as at 2022? What was the WACC one year earlier? Estimate the important financial information such as the after-tax cost of debt, the risk-free rate, the market risk premium, the cost of equity and the weight of debt and equity. Clearly specify and justify the assumptions and calculations required for these analyses (ie. how did you select the beta, risk-free rate, market return, etc). WACC Calculation for Atlasian 2021 2022 Shares Outstanding (in millions) Share Price Market Value Equity Total Market Value of Debt Total Capital - Atlassian Weight of Debt Weight of Equity Cost of Debt Effective Interest Rate for Atlassian Tax Rate After-tax Cost of Debt Cost of Equity Beta Market risk premium Rf Cost of…AFN EQUATION Refer to Problem 16-1. What additional funds would be needed if the companys year-end 2019 assets had been 4 million? Assume that all other numbers are the same. Why is this AFN different from the one you found in Problem 16-1? Is the companys capital intensity the same or different? Explain.
- Montclair Company is considering a project that will require a $500,000 loan. It presently has total liabilities of $220,000 and total assets of $620,000. 1. Compute Montclair’s (a) current debt-to-equity ratio and (b) the debt-to-equity ratio assuming it borrows $500,000 to fund the project. 2. If Montclair borrows the funds, does its financing structure become more or less risky?(a) What is the unlevered cost of capital? What is the (post-tax) weighted average cost of capital? [SHOW YOUR WORKING] (b) Should the firm do the project? (Yes/No). How much firm increases in value thanks to the new project? [SHOW YOUR WORKING] (c) What is the debt capacity for the new project in year 0? [SHOW YOUR WORKING]Allied uses debt in its capital structure, so some of the money used to finance the project will be debt. Given this fact, should the projected cash flows be revised to show projected interest charges? Explain
- What is National Co.’s free cash flow for 2022?Company XYZ is considering an investment project that is expected to generate the following cash flows: Year 1: $500,000 Year 2: $700,000 Year 3: $800,000 Year 4: $900,000 Year 5: $1,200,000 The cost of capital for the company is 10%. Calculate the Firm's Present Value (FPV) of the cash flows. To calculate the Firm's Present Value (FPV) of the cash flows, you need to discount each cash flow to its present value using the cost of capital, and then sum up the present values of all cash flows.What is the level of long-term financing if the working capital financing of the firm to fund all fixed asset and 60% of the permanent current assets with long-term financing?
- Why should long-term investments have to be financed by long-term sources of funds? (Atleast 5 Sentences)Use the information in the following table to make a suggestion concerning the proportion of debt that the firm should utilize in its capital structure. Benefit or (cost) No debt 25% debt 50% debt Tax shield $0 $15 $25 75% debt $35 Agency cost -$10 -$4 -$4 -$16 Financial distress cost -$3 -$2 -$8 -$19 The firm can maximize firm value by choosing (25%, 50%, 75% or 0%) debt capital structure.Why it is important to consider relevant cash flow when evaluating capital projects? Use 5 principles of finance to compare them?
