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ABC Corporation has P15,000,000 in invested capital. Its weighted average cost of capital is18%. Annual earnings are expected to be at P3,000,000. After operating for 20 years, it will be closed. Based on these information, how much is the firm value after accounting for excess earnings?
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- Rian Corporation is currently working without using debt. The estimated operating profit per year is $16.065,180.00 while the equity capitalization rate (ke) is 18% pa. In the coming year, Rian is considering replacing some of his shares with a debt of $50 million, with an interest rate of 15% per annum. Question: a. Calculate the value of own capital capitalization (CS), the total capitalization value of the company (V), and the overall capitalization rate (ko) using the Net Income Approach. b. Calculate the amount of equity capitalized value, total capitalization value of the company, and overall capitalization rate using the traditional approach, if additional debt causes the equity capitalization rate (ke) to increase to 20%. c. Draw a graph of the two approaches.Jigzaw Company has Sales amounting to P400,000 with expected increase of 25% next year. Net earnings after tax is P80,000, with 20% dividend payout. If the Current Asset is P250,000 and Spontaneous liability is P130,000, what is the AFN for the company?ABC Corporation has 7,500,000 in invested capital. Its weighted Javerage cost of capital is 16%. Annual earnings are expected to be at 1,500,000. After operating for 25 years, it will be closed. Based on these information, how much is the goodwill of the firm?
- Halliford Corporation expects to have earnings this coming year of $2.81 per share. Halliford plans to retain all of its earnings for the next two years. For the subsequent two years, the firm will retain 52% of its eamings. It will then retain 21% of its earnings from that point onward. Each year, retained earnings will be invested in new projects with an expected retum of 20.73% periyear. Any earnings that are not retained will be paid out as dividends. Assume Halliford's share count remains constant and all earnings growth comes from the investmient of retained earnings. If Halliford's equity cost of capital is 8.1%. what price would you estimate for Halliford stock? Note: Remenber that growth rate is computed as: retention rate x rate of retum. The price per share is S. (Round to the nearest cent.)Rearden Metals expects to have earnings this coming year of $2.50 per share. Rearden plans to retain all of its earnings for the next year. For the subsequent three years, the firm will retain 50% of its earnings. It will then retain 25% of its earnings from that point onward. Each year, retained earnings will be invested in new projects with an expected return of 25% per year. Any earnings that are not retained will be paid out as dividends. Assume Rearden's shares outstanding remains constant and all earnings growth comes from the investment of retained earnings. If Rearden's equity cost of capital is 8%, then what is Rearden's stock price?The Giant Machinery has the current capital structure of 65% equity and 35% debt. Its net income in the current year is $250,000. The company is planning to launch a project that will requires an investment of $175,000 next year. Currently the share of Giant machinery is $25/share. Required: a) How much dividend Giant Machinery can pay its shareholders this year and what is rlividend payout ratio of the company? Assume the Residual Dividend Payout Policy applies b) If the company is paying a dividend of $2.50/share and tomorrow the stock will go ex-dividend. Calculate the ex-dividend price tomorrow morning. Assuming the tax on dividend is 15%. c) Little Equipment for Hire is a subsidiary in the Giant Machinery and currently under the liquidation plan due to the severe contraction of operation due to corona virus. The company plans to pay total dividend of $2.5 million now and $ 7.5 million one year from now as a liquidating dividend. The required rate of return for shareholders is 12%.…
- The Giant Machinery has the current capital structure of 65% equity and 35% debt. Its net income in the current year is $250,000. The company is planning to launch a project that will requires an investment of $175,000 next year. Currently the share of Giant machinery is $25/share. Required: a) How much dividend Giant Machinery can pay its shareholders this year and what is dividend pay-out ratio of the company? Assume the Residual Dividend pay-out Policy applies. b) If the company is paying a dividend of $2.50/share and tomorrow the stock will go ex-dividend. Calculate the ex-dividend price tomorrow morning. Assuming the tax on dividend is 15%. c) Little Equipment for Hire is a subsidiary in the Giant Machinery and currently under the liquidation plan due to the severe contraction of operation due to corona virus. The company plans to pay total dividend of $2.5 million now and $ 7.5 million one year from now as a liquidating dividend. The required rate of return for shareholders is…The Giant Machinery has the current capital structure of 65% equity and 35% debt. Its net income in the current year is $250,000. The company is planning to launch a project that will requires an investment of $175,000 next year. Currently the share of Giant machinery is $25/share. Please answer: a) How much dividend Giant Machinery can pay its shareholders this year and what is dividend payout ratio of the company? Assume the Residual Dividend Payout Policy applies. b) If the company is paying a dividend of $2.50/share and tomorrow the stock will go ex-dividend. Calculate the ex-dividend price tomorrow morning. Assuming the tax on dividend is 15%. c) Little Equipment for Hire is a subsidiary in the Giant Machinery and currently under the liquidation plan due to the severe contraction of operation due to corona virus. The company plans to pay total dividend of $2.5 million now and $ 7.5 million one year from now as a liquidating dividend. The required rate of return for shareholders is…The Giant Machinery has the current capital structure of 65% equity and 35% debt. Its net income inthe current year is $250,000. The company is planning to launch a project that will requires aninvestment of $175,000 next year. Currently the share of Giant machinery is $25/share.Required: How much dividend Giant Machinery can pay its shareholders this year and what is dividendpayout ratio of the company? Assume the Residual Dividend Payout Policy applies.
- National Company expects P30,000,00 in earnings next year. Its dividend payout ratio is 40%, and its equity to asset ratio is 40%. National Company uses no preferred stock. At what amount of financing will there be a break point in National Company’s cost of capital?A stock market analyst has forecasted the following year-end numbers for Raedebe Technology. Sales = $70 million. EBITDA = $20 million. Depreciation = $ 7 million. Amortization = $ 0.The company’s tax rate is 40 percent. The company does not expect any changes in its net operating working capital. This year the company’s planned gross capital expenditures will total $12 million. (Gross capital expenditures represent capital expenditures before deducting depreciation.) What is the company’s forecasted free cash flow for the year?Halliford Corporation expects to have earnings this coming year of $2.765 per share. Halliford plans to retain all of its earnings for the next two years. Then, for the subsequent two years, the firm will retain 51% of its earnings. It will retain 17% of its earnings from that point onward. Each year, retained earnings will be invested in new projects with an expected return of 22.1% per year. Any earnings that are not retained will be paid out as dividends. Assume Halliford's share count remains constant and all earnings growth comes from the investment of retained earnings. If Halliford's equity cost of capital is 9.2%, what price would you estimate for Halliford stock? The stock price will be $ (Round to the nearest cent.)
