We want to understand the relationship between sales growth rates (s) and project FCF growthrates (g).This is useful to think about, because in our spreadsheet models we often need an estimateof g but when we look for analyst forecasts, they often just apply to s.We consider a hypothetical firm in which there are Sales, COGS, Depreciation, Taxes, ONWC,and CAPEX occurring each year.You know that sales growth is constant and equals s.You further know that in any given year, COGS/Sales-c, the tax rate is p, the ratio of ONWC toSales is n, and CAPEX-Depreciation, and Depreciation/Sales-d. s, c, p, n, and d are constants(i.e., fixed parameters that don't change over time).Perform an algebraic series of calculations. Start with FCF = (Sales - COGS - DA - Taxes -etc). Simplify the expression until it is in the form Sales. *((1-c-d)(1-p)-s/(1+s)*n).

To find the relationship between sales growth rates (s) and project Free Cash Flow (FCF) growth…

Answered: We want to understand the relationship…

College Algebra

7th Edition

ISBN:9781305115545

Author:James Stewart, Lothar Redlin, Saleem Watson

Publisher:James Stewart, Lothar Redlin, Saleem Watson

Chapter1: Equations And Graphs

Section: Chapter Questions

Problem 10T: Olympic Pole Vault The graph in Figure 7 indicates that in recent years the winning Olympic men’s...

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Olympic Pole Vault The graph in Figure 7 indicates that in recent years the winning Olympic men’s pole vault height has fallen below the value predicted by the regression line in Example 2. This might have occurred because when the pole vault was a new event there was much room for improvement in vaulters’ performances, whereas now even the best training can produce only incremental advances. Let’s see whether concentrating on more recent results gives a better predictor of future records. (a) Use the data in Table 2 (page 176) to complete the table of winning pole vault heights shown in the margin. (Note that we are using x=0 to correspond to the year 1972, where this restricted data set begins.) (b) Find the regression line for the data in part ‚(a). (c) Plot the data and the regression line on the same axes. Does the regression line seem to provide a good model for the data? (d) What does the regression line predict as the winning pole vault height for the 2012 Olympics? Compare this predicted value to the actual 2012 winning height of 5.97 m, as described on page 177. Has this new regression line provided a better prediction than the line in Example 2?
If your graphing calculator is capable of computing a least-squares sinusoidal regression model, use it to find a second model for the data. Graph this new equation along with your first model. How do they compare?
Ten years ago, the town of Easton decided to increase its annual spending on education so that its high school graduates would be able to earn higher wages. Now Easton has asked you to evaluate the effectiveness of the spending increase. Their data show that before the spending increase, the average annual salary of recent high school graduates was $25,000 and that now that average salary has risen to $28,500. Fortunately for your analysis, a neighboring community (Allentown) did not change its annual spending on education. Ten years ago, recent Allentown high school graduates earned an average of $22,500, and now that average is $23,750. (a) Use a difference-in-differences estimator to determine whether Easton’s spending increase caused the wages of their high school graduates to increase. please provide an accurate answer.
A manufacturer wants to optimize its shipment of goods to its customers. To minimize their turnover time and avoid building up stocks that add costs, the wholesaler wants to know if weather conditions are important in determining the type of shoe demanded. Specifically, he would like to know if high temperatures affect the sale of closed, rubber-heeled walking shoes. He the data showing the temperature recorded at the location of its retail shops, as well as their record of sales of goods, during each day of the past year. What type of analysis should he conduct? What variables should be considered? Explain.
Two pumps capable of delivering 100 hp to an agricultural application are being evaluated in a present economy study. The selected pump will only be utilized for one year, and it will have no market value at the end of the year. Pertinent data are summarized as given follows. If electric power costs $0.10 per kWh and the pump will be operated 4,000 hours per year, which pump should be chosen? Recall that 1 hp = 0.746 kW.
The Jersey Dairy Products Company produces cheese, which it sells to supermarkets and foodprocessing companies. Because of concerns about cholesterol and fat in cheese, the company has seen demand for its products decline during the past decade. It is now considering introducing some alternative low-fat dairy products and wants to determine how much available plant capacity it will have next year. The company has developed an exponential smoothing forecast with a = .40 to forecast cheese demand. The actual demand and the forecasts from the model are as follows:Assess the accuracy of the forecast model by using MAD and cumulative error. If the exponential smoothing forecast model does not appear to be accurate, determine whether a linear trend model would provide a more accurate forecast.
A shoe wholesaler wants to optimize its shipment of shoes to its client retailers. To minimize their turnover time and avoid building up stocks that add costs, the wholesaler wants to know if weather conditions are important in determining the type of shoe demanded. Specifically, she / he would like to know if high temperatures affect the sale of closed, rubber-heeled walking shoes. He / she has the relevant data showing the temperature recorded at the location of its retail shops, as well as their record of sales of these walking shoes, during each day of the past year. What type of analysis should he / she conduct? What variables should be considered? Explain.
Use the basic equation for the capital asset pricing model (CAPM) to Find the risk-free rate for a firm with a required return of 15% and a beta of 1.25 when the market return is 14%
A manufacturing firm, Caleb Corp, produces and sells product in its home (US) market, and in a foreign market. There is inherent risk in the revenues collected from the foreign market due to volatility in the exchange rate. Under a benchmark strategy, all of the production takes place in the home country. The resulting expected profits for Caleb Corp are variable, due to variation in the exchange rate. As an approximation, the firm has estimated profits for five possible ranges of the exchange rate, with profit represented as a lottery, L= (.2, 150; .2, 200; .3, 220; .2,250; .1, 270) The probabilities are estimated probabilities for the different ranges. The outcomes in this lottery are the estimated final profit levels (not changes in profit). (a) Calculate the expected profit if the firm follows this benchmark strategy, i.e., E(L)

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