Consider the table given below to answer the following question. The long-run growth rate is projected at 5% and discount rate is 10%. Year Asset value Earnings Net investment Free cash flow (FCF) Return on equity (ROE) Asset growth rate Earnings growth rate Present value 1 2 3 4 14.00 15.54 17.25 19.15 1.54 1.71 1.90 2.11 1.54 1.71 1.90 1.53 0.57 0.11 0.11 0.11 0.11 0.11 5 6 7 8 9 10 20.68 22.33 24.12 25.33 26.59 27.92 2.34 2.41 2.41 1.86 1.95 2.27 1.65 1.79 1.21 1.27 1.33 0.62 0.56 1.21 1.14 0.53 1.40 0.56 0.11 0.11 0.11 0.105 0.10 0.095 0.07 0.07 0.11 0.08 0.08 0.08 0.05 0.05 0.05 0.05 0.11 0.11 0.08 0.03 0.03 0.00 -0.23 0.05 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.) million

Consider the table given below to answer the following question. The long-run growth rate is projected at 5% and discount rate is 10%. Year Asset value Earnings Net investment Free cash flow (FCF) Return on equity (ROE) Asset growth rate Earnings growth rate Present value 1 2 3 4 14.00 15.54 17.25 19.15 1.54 1.71 1.90 2.11 1.54 1.71 1.90 1.53 0.57 0.11 0.11 0.11 0.11 0.11 5 6 7 8 9 10 20.68 22.33 24.12 25.33 26.59 27.92 2.34 2.41 2.41 1.86 1.95 2.27 1.65 1.79 1.21 1.27 1.33 0.62 0.56 1.21 1.14 0.53 1.40 0.56 0.11 0.11 0.11 0.105 0.10 0.095 0.07 0.07 0.11 0.08 0.08 0.08 0.05 0.05 0.05 0.05 0.11 0.11 0.08 0.03 0.03 0.00 -0.23 0.05 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.) million

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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%.17895620.68 22.33 24.12 25.33 26.591.951.4023414.00 15.54 17.25 19.151.54 1.71 1.90 2.11 2.27 2.34 2.41 2.41 1.861.

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter11: Venture Capital Valuation Methods

Section: Chapter Questions

Problem 1EP

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