3. You are given the duty of valuing your company shares. Expected net income of the next year (year 1) is 2,5 million TL, expected to grow 5% annually in the next 4 years (years 2-5), then will grow by 3% per year till infinity. You will have capex of 500,000TL in year 3, and will invest 200,000 TL each year as additional NWC in years 4 and 5. Cost of capital 12% (r)and firm has 10 million of debt. a. Calculate free cash flows. b. Calculate terminal value. C. What is the value of entire company? d. What is the value of equity? Assume no preferred stock. Round numbers to nearest integer. FCF=NI - Capex - NWC TV FCF 6/r-g6-00

3. You are given the duty of valuing your company shares. Expected net income of the next year (year 1) is 2,5 million TL, expected to grow 5% annually in the next 4 years (years 2-5), then will grow by 3% per year till infinity. You will have capex of 500,000TL in year 3, and will invest 200,000 TL each year as additional NWC in years 4 and 5. Cost of capital 12% (r)and firm has 10 million of debt. a. Calculate free cash flows. b. Calculate terminal value. C. What is the value of entire company? d. What is the value of equity? Assume no preferred stock. Round numbers to nearest integer. FCF=NI - Capex - NWC TV FCF 6/r-g6-00

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Zion Inc. will pay a $4.25 per share dividend in year 5. The company pledges to increase its dividend by 5% (g) per year indefinitely. If you require a 10% return (r) on your investment, how much will you pay for the company’s stock today (Po)?
ABC Sdn Bhd has a gross sales of RM 12000000 for year 2021. This company needs to pay 10% for annual fixed capital, 15% for operation capital and 10% for business taxes. Based on the net profit, they plan to invest 50% of the amount into a stock market. Estimate the amount of his money after THREE (3) years for the following cases:(i) Profit forecast is based on fixed interest rate of 10% per annum.(ii) The profit forecast is 10% per annum compounded every SIX (6) month.
How much would you be prepared to pay for a share in 2 years’ time that pays a $1.5 dividend each year constantly ? Assume the required rate of return is expected to remain constant at 9.1% per year.
A company's next dividend is USD6.5 which is expected to remain stable in the coming years, till perpetuity. Your required rate of return is 16%. a. How much will you offer to buy this stock at? b. If the dividends will grow at a rate of 4% per year, what will be the dividend that the company will distribute in year 16? C. If the dividends will grow at a rate of 2%, what will be the price of the stock in year 9?
3) What is the future value at the end of year 20 of a series of 16 deposits? The first deposit occurs at the end of year 5 and is $800. The remaining deposits increase by $150/year (so the last deposit will be $3,050 and will occur at the end of year 20). Assume i = 9% annual rate compounded annually. Answer 4) Your business is expected to generate a $40,000 profit at the end of year 1, and profit will increase by 7% per year through year 10. If you can earn 10% annual interest compounded annually, what is the present value of all your profits over the next 10 years? Answer
A firm’s current profits are P550,000. These profits are expected to grow indefinitely at a constant annual rate of 5 percent. If the firm’s opportunity cost of funds is 8 percent, determine the value of the firm: a. The instant before it pays out current profits as dividends: b. The instant after it pays out current profits as dividends.
Gordon Growth Company is expected to pay a dividend of $4 next period and dividends are expected to grow at 6% per year. The required return is 16%. What is the price expected to be in year 4? O a. $10 O b. $50.50 O c. $41.6 O d. $40 You intend to purchase a 10-year, $1,000 face value bond that pays interest of $60 every 6 months. If your nominal annual required rate of return is 10 percent with semiannual compounding, how much should you be willing to pay for this bond? Select one:
The company is going to invest P26,000, P34,000, P46,000, and P54,000 respectively into a savings account at the end of each year through 4 years. Each of these amounts will compound at 4% per annum until the 4th year. What is the total expected amount that the company will have at the end of the 4th year?
You expect that Bean Enterprises will have earnings per share of $2 for the coming year· Bean plans to retain all of its earnings for the next three years. For the subsequent two years, the firm plans on retaining 50% of its earnings. It will then retain only 25% of its earnings from that point forward. Retained earnings will be invested in projects with an expected return of20% per year. If Bean’s equity cost of capital is 12%, then the price of a share of Bean's stock is closest to:
Light company Intends to introduce a soft drink in the market in the next year. The projected revenues and expenses for the next five years are as follows: Year 1 2 3 4 Revenues 300M 200M 315M 420M Expenses 160M 50M 115M 200M The initial capital outlay is 500M which will be depreciated over the four-year period. The prevailing tax rate is 30%. What is the Accounting Rate of Return (ARR)? Select one: A. 14.7% B.21% C.25.5% D.None of the above
A mine will have a net annual income of P400,000.00 annually for 15 years. Determine its value if the annual dividend rate is to be 12% payable annually and sinking fund is to accumulate 7% annually.
XYZ Corporation issued a dividend amounting to ₱25last year. It is projected that it will grow by 3% yearly. The investors expect an annual yield of 10%. The fair value of the stock would be?a. ₱ 500 b. ₱ 357.14 c. ₱ 250d. ₱ 833.33 e. ₱ 257.50 f. ₱ 367.86

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