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Thor's Dilema Thor Inc. is financed with 30% debt at a cost of 10%. Thor's capital...
Sallie's Sandwiches Sallie's Sandwiches is financed using 20% debt at a cost of 8%. Sallie projects...
Sallie's Sandwiches Sallie's Sandwiches is financed using 20% debt at a cost of 8%. Sallie projects combined free cash flows and interest tax savings of $2 million in Year 1, $4 million in Year 2, $5 million in Year 3, and $117 million in Year 4. (The Year 4 value includes the combined horizon values of FCF and tax shields.) All cash flows are expected to grow at a 3% constant rate after Year 4. Sallie's beta is 2.0, and...
Asgard Corp, is considering to purchase a smaller kingdom called Midgard. Asgard’s analysts project that the...
Asgard Corp, is considering to purchase a smaller kingdom called Midgard. Asgard’s analysts project that the merger will result in the following incremental free cash flows, horizon values, and tax shields: Year 1 2 3 4 Free cash flow $2 $4 $4 $6 Unlevered horizon value $80 Tax shield $1 $2 $3 $4 Horizon value of tax shield $30 Assume that all cash flows occur at the end of the year and are in millions. Midgard is currently financed with...
Raymond Supply, a national hardware chain, is considering purchasing a smaller chain, Strauss & Glazer Parts...
Raymond Supply, a national hardware chain, is considering purchasing a smaller chain, Strauss & Glazer Parts (SGP). Raymond's analysts project that the merger will result in the following incremental free cash flows, tax shields, and horizon values (in millions): Year 1 2 3 4 FCF $2 $3 $4 $7 Unlevered Horizon value $75 Tax shield $1 $1 $2 $3 Horizon value of tax shield $32 Assume that all cash flows occur at the end of the year. SGP is currently...
HLINE Corp has a target capital structure of 30% debt and 70% equity. It has $300...
HLINE Corp has a target capital structure of 30% debt and 70% equity. It has $300 million in bonds outstanding with a yield of 8% and 50 million shares of stock outstanding with a current market price of $14.00 per share. The company's beta is 1.25 and the risk-free rate of interest is 4% with a market risk premium of 6%. The firm has a tax rate of 25%. The company is looking to raise $250 million to build a...
. Emerson Enterprises, Inc., a nationwide electronics company, is considering purchasing a smaller regional electronics manufacturer,...
. Emerson Enterprises, Inc., a nationwide electronics company, is considering purchasing a smaller regional electronics manufacturer, Midwest Electronics, Inc. Emerson Enterprises’ analysts project that the merger will result in incremental free cash flows as follows: Year Free Cash Flow (FCF) t = 1 $4 million t = 2 $5.5 million t = 3 $6.75 million t = 4 $25 million The Year 4 Free Cash Flow (FCF) listed in the table above includes a horizon value of $15 million. Assume...
Data for Mercy Inc is as follows; FCF= $10 million WACC= 10% \FCF is expected to...
Data for Mercy Inc is as follows; FCF= $10 million WACC= 10% \FCF is expected to grow at a constant rate of gL=5% ST Investments = $20 million Debt= $40 million Preferred Stock= $10 million Number of shares = 100,000 Mercy Inc, projected free cash flows are as follows Year 1 FCF = $1 million Year 2 FCF = $5 million Year 3 FCF =$10 million FCF grows at a constant rate of 5% after Year 3. Question 1 (a)...
A company has 1 million shares outstanding and a target capital structure of 30% debt. The...
A company has 1 million shares outstanding and a target capital structure of 30% debt. The company’s beta is 1.4, and it has $10.82 million in debt paying an 8% interest rate. The FCF for the current year is $2 million, and it is expected to grow at 5% annually. The company pays a 40% tax rate. The risk-free rate is 5%, and the market risk premium is 6%. What is the current total intrinsic value of the equity?
This year, FCF, Inc. Has earnings before interest and taxes of $10 million, depreciation expenses of...
This year, FCF, Inc. Has earnings before interest and taxes of $10 million, depreciation expenses of $1 million, capital expenditures of $1.5 million and has increased its net working capital by $500,000. If its tax rate is 35%, what is its free cash flow?
AllCity Inc. is financed 40% with debt, 20% with preferred stock, and 40% with common stock....
AllCity Inc. is financed 40% with debt, 20% with preferred stock, and 40% with common stock. Its pre-tax cost of debt is 6%; its preferred stock pays an annual dividend of $2.75 and is priced at $32. It has an equity beta of 1.4. Assume the risk-free rate is 2%, the market risk premium is 7%, and AllCity's tax rate is 35%. What is its after-tax WACC? What is its after-tax WACC? r Subscript wacc= (Round to five decimal places.)
Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a target capital structure consisting of 30% debt; its beta is 1.35 (given its target...
Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a target capital structure consisting of 30% debt; its beta is 1.35 (given its target capital structure). Vandell has $11.22 million in debt that trades at par and pays an 7.9% interest rate. Vandell’s free cash flow (FCF0) is $1 million per year and is expected to grow at a constant rate of 5% a year. Both Vandell and Hastings pay a 30% combined federal...
HLINE Corp has a target capital structure of 30% debt and 70% equity. It has $300 million in bonds outstanding with a yield of 8% and 50 million shares of stock outstanding with a current market price of $14.00 per share. The company's beta is 1.25 and the risk-free rate of interest is 4% with a market risk premium of 6%. The firm has a tax rate of 25%. The company is looking to raise $250 million to build a...
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