Make the following Assumptions: Tangible Asset Value = 16,200,000 Required Return on Tangile Assets = 16% Required Return on Equity = 24% Forecast Net Income for next period (year) = 4,800,000 Capitalization Rate for Excess earnings to compute Intangible Asset Value = 30% Current Market Value of Interest Bearing Liabilities = 12,000,000 Compute the Market Value of Equity using the Excess Earnings Approach
Make the following Assumptions: Tangible Asset Value = 16,200,000 Required Return on Tangile Assets = 16% Required Return on Equity = 24% Forecast Net Income for next period (year) = 4,800,000 Capitalization Rate for Excess earnings to compute Intangible Asset Value = 30% Current Market Value of Interest Bearing Liabilities = 12,000,000 Compute the Market Value of Equity using the Excess Earnings Approach
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter12: Valuation: Cash-flow Based Approaches
Section: Chapter Questions
Problem 2CIC
Related questions
Question
Make the following Assumptions:
Tangible Asset Value = 16,200,000
Required
Required
Capitalization Rate for Excess earnings to compute Intangible Asset Value = 30%
Current Market Value of Interest Bearing Liabilities = 12,000,000
Compute the Market Value of Equity using the Excess Earnings Approach
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning