Consider the table given below to answer the following question. The long-run growth rate is projected at 5% and discount rate is 10%.YearAsset valueEarningsNet investmentFree cash flow (FCF)Return on equity (ROE)Asset growth rateiEarnings growth rate12456781028.49 29.9215.00 16.65 18.48 20.51 22.16 23.93 25.84 27.131.65 1.83 2.031.65 1.83 2.031.99 2.091,42 1.502.26 2.44 2.51 2.58 2.581.64 1.77 1.91 1.29 1.360.62 9.66 0.60 1.29 1.220.11 0.11 0.11 0.11 0.11 0.105 0.10 0.0950.11 0.11 0.11 0.08 0.08 0.00 0.05 0.05 0.050.11 0.11 0.11 0.080.570.600.079.070.050.03 0.03 0.00 -0.23 0.05Assuming that competition drives down profitability (on existing assets as well as new investment) to 10.5% in year 6, 10% in year 7.9.5% in year 8, and 7% in year 9 and all later years. What is the value of the concatenator business? (Do not round intermediatecalculations. Enter your answer in millions rounded to 2 decimal places.)Present valuemillion

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Description: Consider the table given below to answer the following question. The long-run growth rate is projected at 5% and discount rate is 10%.YearAsset valueEarningsNet investmentFree cash flow (FCF)Return on equity (ROE)Asset growth rateiEarnings growth ra

The present value of an annuity is the current value of a series of future cash flows, discounted at…

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Assuming that competition drives down profitability (on existing assets as well as new investment) to 10.5% in year 6, 10% in year 7. 9.5% in year 8, and 7% in year 9 and all later years. What is the value of the concatenator business? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Present value million

Assuming that competition drives down profitability (on existing assets as well as new investment) to 10.5% in year 6, 10% in year 7. 9.5% in year 8, and 7% in year 9 and all later years. What is the value of the concatenator business? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Present value million

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter7: Valuation Of Stocks And Corporations

Section7.6: Valuing Nonconstant Growth Stocks

Problem 3ST

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Consider the table given below to answer the following question. Year Asset value Earnings Net investment Free cash flow Return on equity Asset growth rate Earnings growth rate 1 9.00 1.44 1.44 0.00 0.16 0.16 Present value 2 10.44 1.67 1.67 0.00 0.16 0.16 0.16 million 3 4 5 12.11 14.05 15.87 1.94 2.54 2.25 1.94 1.83 2.06 0.00 0.42 0.48 0.16 0.16 0.16 0.16 0.13 0.13 0.16 0.16 0.13 6 7 17.94 20.27 2.78 2.33 0.45 0.155 0.13 0.09 3.04 2.03 1.01 0.15 0.10 0.09 8 9 22.30 24.53 3.23 2.94 2.23 2.45 1.00 0.49 0.145 0.12 0.10 0.10 0.06 -0.09 Assuming that competition drives down profitability (on existing assets as well as new investment) to 15.5% in year 6, 15% in year 7, 14.5% in year 8, and 12% in year 9 and all later years. What is the value of the concatenator business? Assume 13% cost of capital. Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. 10 26.98 3.24 2.70 0.54 0.12 0.10 0.10
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