PRIN.OF CORP.FINANCE-CONNECT ACCESS
13th Edition
ISBN: 2810023360757
Author: BREALEY
Publisher: MCG
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Textbook Question
Chapter 29, Problem 23PS
Long-term financial plans* Table 29.15 summarizes the 2019 income statement and end-year balance sheet of Drake’s Bowling Alleys. Drake’s
- a. What is the implied level of assets at the end of 2020?
- b. If the company pays out 50% of net income as dividends, how much cash will Drake need to raise in the capital markets in 2020?
- c. If Drake is unwilling to make an equity issue, what will be the debt ratio at the end of 2020?
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3. After studying the Financial Forecast and planning, go through the assumption date given
below and calculate how much Discretionary financing will we need in 2021 year?
Suppose this year's sales will total $32 million.
Next year, we forecast sales of $50 million.
Net income should be 5% of sales.
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If this year's information's are as follows:
This year
% of $32m
Assets
Current Assets
Fixed Assets
$8m
25%
$16m.
50%
Total Assets
$24m
Liab, and Equity
Accounts Payable
Accrued Expenses
Notes Payable
Long Term Debt
$4m
12.5%
$4m
12.5%
$1m
nla
$6m
Total Liabilities
$15m
Common Stock
Retained Earnings
Equity
Total Liab. & Equity
$7m
nla
$2m
$9m
$24m
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).
Assume today is 15 Jan 2020. You t e the following information regarding Salalah Ceramics
31 Dec 2019
31 Dec 2020
31 Dec 2021
31 Dec 2022
Cash Flow from 12000
Operations
Cash Investment 7600
Cash flow from operations will grow by 10% every year up to 2022 and cash investment will
grow by 20% every year up to 2022.
FCF growth after 2022 will be 5% and required return is 12%. Assuming net debt is 7000
1. What is the firm's enterprise value
2. What is the firm's value of equity
Chapter 29 Solutions
PRIN.OF CORP.FINANCE-CONNECT ACCESS
Ch. 29 - Sources and uses of cash State whether each of the...Ch. 29 - Sources and uses of cash Table 29. 11 shows...Ch. 29 - Prob. 3PSCh. 29 - Sources and uses of cash and working capital...Ch. 29 - Prob. 5PSCh. 29 - Prob. 6PSCh. 29 - Cash cycle A firm is considering several policy...Ch. 29 - Collections on receivables Here is a forecast of...Ch. 29 - Collections on receivables If a firm pays its...Ch. 29 - Forecasts of payables Dynamic Futon forecasts the...
Ch. 29 - Cash budget Table 29.13 lists data from the budget...Ch. 29 - Short-term financial plans a. Paymore places...Ch. 29 - Short-term financial plans Which items in Table...Ch. 29 - Short-term financial plans Work out a short-term...Ch. 29 - Prob. 16PSCh. 29 - Prob. 17PSCh. 29 - Long-term financial plans Corporate financial...Ch. 29 - Prob. 19PSCh. 29 - Prob. 20PSCh. 29 - Long-term financial plans Construct a new model...Ch. 29 - Long-term financial plans a. Use the Dynamic...Ch. 29 - Long-term financial plans Table 29.15 summarizes...Ch. 29 - Long-term financial plans Abbreviated financial...Ch. 29 - Prob. 25PSCh. 29 - Forecast growth rate What is the maximum possible...Ch. 29 - Forecast growth rate a. What is the internal...Ch. 29 - Forecast growth rate Bio-Plasma Corp. is growing...Ch. 29 - Long-term plans Table 29.18 shows the 2019...
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