The table below gives the estimated free cash flow under the 0.26% growth scenario. Using these estimates and assuming a cost of capital of9.8%, compute the value of KMS.YearFree Cash Flow (000)Free Cash Flow of FirmContinuation Value2013$7,6662014$5,7962015The value of KMS is $ thousand. (Round to the nearest integer.)-$15,6642016$5,3662017$6,4432018D$7,608$222,332The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus depreciation (effectively expensing capital expenditures). However, we will stillinclude depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during yourcareer.

The value of a company is the sum of all its marketable assets. The Modigliani-Miller proportion…

Answered: , compute the value of KMS.

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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The table below gives the expected cash inflows of a firm for a period of 9 years. Time 3 6 9 Cash inflow (£) 45000 90000 120000 Assume the present value of the cash outflows is £87000, and the applicable cost of capital is 13%. Calculate the (a) Future value of the cash inflows (b) Modified internal rate of return (MIRR)
The firm forecasts a free cash flow of ₱ 41 million in Year 3, i.e., at t = 3, and it expects FCF to grow at a constant rate of 5% thereafter. If the weighted average cost of capital is 11% and the cost of equity is 15%, what is the horizon value, in millions at t = 3? a. ₱ 840 b. ₱ 717c. ₱ 883 d. ₱ 834
Find the present value of the streams of cash flows shown in the following table. Assume that the firm's opportunity cost is 12%. A B C Year Cash Flow Year Cash Flow Year Cash Flow 1 -$2,000 1 $ 10,000 1-5 $ 10,000/yr 2345 5 2 3,000 2-5 5,000/yr 6-10 8,000/yr 4,000 6 7,000 6,000 8,000
(A_FIG1) In the following cash flows diagram, Determine the value of Z if the interest rate i = 8% per year? A = $500/year 1 2 3 4 6. 7 8 9 Years O a. $3,974 b. $7,116 O c. $ 10,401 O d. $5,206 O O
Find teh present value of the streams of cash flows shown in the following table. Assume that the firms opportunity cost is 14% A: Year Cash Flow 1 -$2100 2 2900 3 4000 4 5900 5 8200 B: Year Cash Flow 1 $9000 2-5 $5000/yr 6 $7200 C: Year Cash Flow 1-5 $12000/yr 6-10 $8000/yr The presevent vaule of stream A, B, and C
Find the profitability index (PI) for the following series of future cash flows, assuming the company’s cost of capital is 14.12 percent. The initial outlay is $418,044. Year 1: $164,390 Year 2: $152,563 Year 3: $195,331 Year 4: $199,028 Year 5: $175,965
For the net cash flow series shown, find the external rate of return using the ROIC method at an investment rate of 15% per year 4 3 2 Year S.NCF 40.21% 10,000- 50,000 90,000- 20,000 48,000 10.73% 17.12% 25.22%
A company forecasts a free cash flow of $55 million in Year 3, i.e., at t = 3, and it expects FCF to grow at a constant rate of 5.5% thereafter. If the weighted average cost of capital (WACC) is 10.0% and the cost of equity is 15.0%, then what is the horizon, or continuing, value in millions at t = 3? Group of answer choices $1,083 $1,148 $1,289 $1,186 $1,212
Misra Inc. forecasts a free cash flow of $55 million in Year 3, i.e., at t = 3, and it expects FCF to grow at a constant rate of 5.5% thereafter. If the weighted average cost of capital (WACC) is 10.0% and the cost of equity is 15.0%, then what is the horizon, or continuing, value in millions att = 3? a. $1,212 b. $1,083 O c. $1,186 O d. $1,148 O e. $1,289
Find the net present value (NPV) for the following series of future cash flows, assuming the company’s cost of capital is 10.19 percent. The initial outlay is $471,448. Year 1: 191,637 Year 2: 128,236 Year 3: 161,255 Year 4: 138,369 Year 5: 190,517 Round the answer to two decimal places in percentage form.
You are evaluating Adidas and expect it to generate the following free cash flows over your forecast horizon: Year 1 2 3 4 5 FCF ($ millions) 53.1 66.9 77.8 75.5 82.1 After your forecast horizon, you expect FCF to grow at 4.3% per year forever. If the weighted average cost of capital (dsicount rate) is 13.8%, what is: a. The enterprise value of Adidas. b. Assume Adidas has no excess cash, debt of $318 million, and 39 million shares outstanding, what is its stock price? Question content area bottom Part 1 a. The enterprise value will be $enter your response here million. (Round to two decimal places.) b. The stock price will be $enter your response here. (Round to two decimal places.)
A company is considering an investment where the estimated cash flows are as follows: Year Cash Flow 0 (100000) 1 60000 2 80000 3 40000 4 30000 The company cost of capital is 13%. What is the NPV? 51800 61871 56800 122000 51000

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