Consider the table given below to answer the following question.YearAsset valueEarningsNet investmentFree cash flow (FCF)Return on equity (ROE)Asset growth rateEarnings growth rate10.00Present value1.201.290.000.120.1223456789101.8411.20 12.54 14.05 15.31 16.69 18.19 19.29 20.44 21.671.34 1.51 1.692.00 2.18 2.31 2.45 2.601.34 1.51 1.261.38 1.50 1.09 1.16 1.23 1.300.420.46 0.50 1.09 1.16 1.23 1.300.120.12 0.12 0.12 0.12 0.120.12 0.12 0.090.09 0.06 0.06 0.06 0.060.00 0.000.12. 0.120.120.090.12 0.12 0.12 0.09 0.09 0.09 0.06 0.06 0.06Assuming that competition drives down profitability (on existing assets as well as new investment) to 11.5% in year 6, 11% in year 7.10.5% in year 8, and 8% in year 9 and all later years. What is the value of the concatenator business? Assume 10% cost of capital. (Donot round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)D$ 14.46 million

To calculate the value of the concatenator business, we need to calculate the present value of the…

1.20 1.34 1.51 1.26 1.38 1.50 1.09 0.00 0.00 0.00 0.42 0.46 0.50 1.09 1. 0.12 0.12 0.12 0.12 0.12 0.12 0.12 0. 0.12 0.12 0.12 0.09 0.09 0.09 0.06 0. 0.12 0.12 0.12 0.09 0.09 0.09 0. rives down profitability (on existing assets as well as n ar 9 and all later years. What is the value of the conca ulations. Enter your answer in millions rounded to 2

1.20 1.34 1.51 1.26 1.38 1.50 1.09 0.00 0.00 0.00 0.42 0.46 0.50 1.09 1. 0.12 0.12 0.12 0.12 0.12 0.12 0.12 0. 0.12 0.12 0.12 0.09 0.09 0.09 0.06 0. 0.12 0.12 0.12 0.09 0.09 0.09 0. rives down profitability (on existing assets as well as n ar 9 and all later years. What is the value of the conca ulations. Enter your answer in millions rounded to 2

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 14MC: This calculation determines profitability or growth potential of an investment, expressed as a...

See similar textbooks

Similar questions

What is the profitability index of an investment with cash flows in years 0 thru 4 of -340, 120, 130, 153, and 166, respectively, and a discount rate of 13%? A. 0.15 B. 0.22 C. 0.35 D. 0.42 E. 0.55
The file Fortune500 contains data for profits and market capitalizations from a recent sample of firms in the Fortune 500 a. Prepare a scatter diagram to show the relationship between the variables Market Capitalization and Profit in which Market Capitalization is on the vertical axis and Profit is on the horizontal axis. Comment on any relationship between the variables. b. Create a trendline for the relationship between Market Capitalization and Profit. What does the trendline indicate about this relationship?
Can I please have the answers in these format : payback period = investement net annual inflow ARR = Average annual profit x 100 Average investment 1 can I have the answers in these type of format
Determine the ERR (External rate of return) of the cash flows if external rate (e) is given as %12. Cash Flow Year 0 1 2 3 4 5 6 7 Select one: a.0.228861 b.0.204146 c.0.245007 d.0.274516 e.0.181262 f.0.168017 g.0.19667 h.0.264278 -5000 2000 4000 -1500 3000 4000 -6000 9000
Consider the return of investment as given in the following table: Year 2016 2017 2018 2019 2020 Amount (RM) 5000 5175 5394.94 5705.15 6047.46
Calculate the APR of the following investment, entered as a percentage (Example: if your answer is 14.5%, enter 14.5 and not 0.145) Year Number Cashflow 0 -11000 1 3000 2 3500 3 2900 4 2800
Calculate the EAR of the following investment, entered as a percentage (Example: if your answer is 0.145, enter 14.5) Year Number Cashflow 0 -11400 1 3500 2 3000 3 3100 4 2800 Your Answer:
The possible rates of return of two assets, A and B, under different economic conditions are given below: Economic Situation Probability Return of Asset A Return of Asset B Recession 0.2 10% 6% Stable 0.5 14% 15% Growth 0.3 20% 11% An investor places 50% of his funds in Asset A and 50% in Asset B. [Note: you may use correlation between A and B as 0.2401] Required: (i)Calculate the risk and expected return for each asset. (ii)Calculate the risk and expected return of the investor’s 2-assets portfolio. (iii) What do you understand by total risk?
What is the internal rate of return of the following cash flow diagram? a. 20.0% b. 18.2% c. 17.5% d. 15.0%.
How do you calculate net investment in working capital, net cash flows, present value of net cash flows, and NPV? WACC is 10.10%
Use the information from this table to find the covariance for each asset. State of Economy Probability of State Return on Asset J Return on Asset K Boom 30% 5% 24% Growth 40% 5% 12% Stagnant 20% 5% 4% Recession 10% 5% -10%
The probability distribution of the returns of two assets, A and B, are shown in the table below. Calculate the covariance between the returns of asset A and asset B. State of Economy Probability of State Return of Asset A Return of Asset B Boom 0.20 40% 5% Normal 0.45 20% 10% Slow Down 0.25 0% 15% Recession 0.10 -20% 30% O-0.3750 -0.0114 0.3750 -50.2500 -2.525