Year Sales 1 270 Growth versus Prior Year 12.5% EBIT (10% of Sales) 27.00 Less: Income Tax (20%) (5.40) Less Increase in NWC (12% of Change in Sales) 3.60 Free Cash Flow 18.00 0 240 OA. $15.25 OB. $27.45 OC. $7.62 OD. $13.72 2 290 7.4% 29.00 5.80 2.40 20.80 Banco Industries expect sales to grow at a rapid rate over the next three years, but settle to an industry growth rate of 5% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. If Banco industries has a weighted average cost of capital of 12%, $40 million in cash, $60 million in debt, and 18 million shares outstanding, which of the following is the best estimate of Banco's stock price at the start of year 1? **** 3 310 6.9% 31.00 6.20 2.40 22.40 325.5 5.0% 32.55 6.51 1.86 24.18

Year Sales 1 270 Growth versus Prior Year 12.5% EBIT (10% of Sales) 27.00 Less: Income Tax (20%) (5.40) Less Increase in NWC (12% of Change in Sales) 3.60 Free Cash Flow 18.00 0 240 OA. $15.25 OB. $27.45 OC. $7.62 OD. $13.72 2 290 7.4% 29.00 5.80 2.40 20.80 Banco Industries expect sales to grow at a rapid rate over the next three years, but settle to an industry growth rate of 5% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. If Banco industries has a weighted average cost of capital of 12%, $40 million in cash, $60 million in debt, and 18 million shares outstanding, which of the following is the best estimate of Banco's stock price at the start of year 1? **** 3 310 6.9% 31.00 6.20 2.40 22.40 325.5 5.0% 32.55 6.51 1.86 24.18

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter12: Corporate Valuation And Financial Planning

Section: Chapter Questions

Problem 3P: Smiley Corporations current sales and partial balance sheet are shown here. Sales are expected to...

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Assuming a 1-year, money market account investment at 2.282.28 percent (APY), a 1.391.39 percent inflation rate, a 2525 percent marginal tax bracket, and a constant $50 comma 00050,000 balance, calculate the after-tax rate of return, the real rate of return, and the total monetary return. What are the implications of this result for cash management decisions?
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Assuming a 1-year, money market account investment at 2.282.28 percent (APY), a 1.391.39 percent inflation rate, a 2525 percent marginal tax bracket, and a constant $50 comma 00050,000 balance, calculate the after-tax rate of return, the real rate of return, and the total monetary return. What are the implications of this result for cash management decisions? Question content area bottom Part 1 Assuming a 1-year, money market account investment at 2.282.28% (APY), a 2525% marginal tax bracket, and a constant $ 50 comma 000$50,000 balance, the after-tax rate of return is 1.711.71%. (Round to two decimal places.) Part 2 Assuming a 1-year, money market account investment at 2.282.28% (APY), a 2525% marginal tax bracket, and a constant $ 50 comma 000$50,000 balance, the after-tax monetary return is $855855. (Round to the nearest dollar.) Part 3 Given an after-tax return of 1.711.71% and an inflation rate of 1.391.39%, the after-tax real rate…
Assuming a 1-year, money market account investment at 2.282.28 percent (APY), a 1.391.39 percent inflation rate, a 2525 percent marginal tax bracket, and a constant $50 comma 00050,000 balance, calculate the after-tax rate of return, the real rate of return, and the total monetary return. What are the implications of this result for cash management decisions? Question content area bottom Part 1 Assuming a 1-year, money market account investment at 2.282.28% (APY), a 2525% marginal tax bracket, and a constant $ 50 comma 000$50,000 balance, the after-tax rate of return is 1.711.71%. (Round to two decimal places.) Part 2 Assuming a 1-year, money market account investment at 2.282.28% (APY), a 2525% marginal tax bracket, and a constant $ 50 comma 000$50,000 balance, the after-tax monetary return is $855855. (Round to the nearest dollar.) Part 3 Given an after-tax return of 1.711.71% and an inflation rate of 1.391.39%, the after-tax real rate…
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