Victoria Enterprises expects earnings before interest and taxes (EBIT) next year of $2.1 million. Its depreciation and capital expenditures will both be $286,000, and it expects its capital expenditures to always equal its depreciation. Its working capital will increase by $47,000 over the next year. Its tax rate is 35%. If its WACC is 10% and its FCFs are expected to increase at 5% per year in perpetuity, what is its enterprise value? The company's enterprise value is $. (Round to the nearest dollar.)

Victoria Enterprises expects earnings before interest and taxes (EBIT) next year of $2.1 million. Its depreciation and capital expenditures will both be $286,000, and it expects its capital expenditures to always equal its depreciation. Its working capital will increase by $47,000 over the next year. Its tax rate is 35%. If its WACC is 10% and its FCFs are expected to increase at 5% per year in perpetuity, what is its enterprise value? The company's enterprise value is $. (Round to the nearest dollar.)

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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A company is considering a new product line to supplement its range line. It is anticipated that the new product line will involve cash investments of shs 700,000 at time 0 and shs.1.0 million in year 1. After tax cash flows of shs.250,000 are expected in year 2, shs.300,000 in year 3, shs. 350,000 in year 4, and shs. 400,000 each year thereafter through year 10. b) Required i) return? What is the projects internal rate of What would be the case if the required rate of return ii) were 10 percent? Swipe up for filters Add a caption.
Shabbona Partners expects to have free cash flows of $38,950,000 next year, and free cash flows are expected to grow at a constant rate of 3% per year. If the firm's WACC is 9% per year, what is the value of Shabbona's operations?
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Suppose you have an account that will grow to $253,000.00 in 25 years. It grows at 7.5% annual interest, compounded monthly, under the current investment strategy. The owner of the account, however, wants it to have $368,000.00 after 25 years. How much additional monthly contribution should they make to meet their goal?
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A start-up company expects to spend $100,000 the first year for advertising, with amounts decreasing by $10,000 each year. Income is expected to be $400,000 the first year, increasing by $50,000 each year. Determine the equivalent annual worth in years 1 through 5 of the company’s net cash flow at an interest rate of 16% per year
Consider the case of Flying Cow Aviation Inc.: Flying Cow Aviation Inc. is expected to generate a free cash flow (FCF) of $1,180,000 this year, and the FCF is expected to grow at a rate of 14% over the following two years (FCF22 and FCF33). After the third year, however, the company’s FCFs are expected to grow at a constant rate of 6% per year, which will last forever (FCF4 - ∞4 - ∞). If Flying Cow’s weighted average cost of capital (WACC) is 12%, complete the following table and compute the current value of Flying Cow’s operations. Round all dollar amounts to the nearest whole dollar, and assume that the firm does not have any nonoperating assets in its balance sheet and that all FCFs occur at the end of each year. Year CFtt PV(FCFtt) FCF11 $1,180,000 FCF22 FCF33 FCF44 Horizon Value4- ∞4- ∞ Vopop = Flying Cow’s debt has a market value of $16,875,959, and Flying Cow has no preferred stock in its…

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