Please note market value of debt is not provided hence we have calculated value of equity by dividing in proportion.
Question 3. You need to estimate the market value of South Western Airlines. You have the...
You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its future investments in new plant and working capital Year Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation Pretax profit Tax at 40% Investment 78 38 40 16 14 98 48 50 20 17 113 118 58 60 24 53 60 24 20 From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged...
You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its future investments in new plant and working capital: Year 1 2 3 4 Earnings before interest, taxes, depreciation, and amortization (EBITDA) $ 74 $ 94 $ 109 $ 114 Depreciation 24 34 39 44 Pretax profit 50 60 70 70 Tax at 40% 20 24 28 28 Investment 18 21 24 26 From year 5 onward,...
You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its future investments in new plant and working capital: $ $ 124 $ Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation Pretax profit Tax at 40% Investment Year 1 2 3 4 $ 89 $ 109 293944 49 60 70 80 80 24 28 32 32 18 21 24 26 From year 5 onward, EBITDA, depreciation,...
Roll Corporation has 20,000 shares of common stock outstanding. It's financed entirely with equity. The un-levered cost of capital is 14%. The company distributes all of its earnings to equity holders as dividends at the end of each year. And Roll Corporation is subject to a corporate tax rate of 30%. Roll Corporation estimates that its annual EBIT will be as follow: 20% Bust with EBIT 2600, 50% Expected with EBIT 3620, 30% Expansion with EBIT 4900. The firm expects...
Roll Corporation has 20,000 shares of common stock outstanding. It's financed entirely with equity. The un-levered cost of capital is 14%. The company distributes all of its earnings to equity holders as dividends at the end of each year. And Roll Corporation is subject to a corporate tax rate of 30%. Roll Corporation estimates that its annual EBIT will be as follow: 20% Bust with EBIT 2600, 50% Expected with EBIT 3620, 30% Expansion with EBIT 4900. The firm expects...
Roll Corporation has 20,000 shares of common stock outstanding. It's financed entirely with equity. The un-levered cost of capital is 14%. The company distributes all of its earnings to equity holders as dividends at the end of each year. And Roll Corporation is subject to a corporate tax rate of 30%. Roll Corporation estimates that its annual EBIT will be as follow: 20% Bust with EBIT 2600, 50% Expected with EBIT 3620, 30% Expansion with EBIT 4900. The firm expects...
if u answer is 150 million, it’s incorrect answer Example 5.12: A company had total revenues of $200 million, operating profit margin of 20%, and depreciation and amortization expense of $10 million over the trailing twelve months. The company currently has $300 million in total debt and $100 million in cash and cash equivalents. If the company's market capitalization (market value of its equity) is $1 billion, what is its EV/EBITDA ratio? Solution: EBITDA = EBIT + Depreciation & Amortization...
You are asked to value a company and have the following forecast (in million dollars) of its future profits and future investments in new plant and working capital. Year1234Depreciation expenses20303540Profit after tax (tax: 40%)36424848Investment in plants and working capital12151820 From year 5 onwards, depreciation and investment in plants and working capital are expected to remain unchanged at year-4 levels. The Shard is financed 50% by debt and 50% by equity. Its cost of equity is 15% and its debt yields...
6. Consider the book and market values of a firm: Book value: Working capital 20 Debt Fixed assets 60 80 100 Equity Total Total 100 Market value: 20 Debt 40 Working capital Fixed assets 140 120 Equity Total Total 160 160 Assume a Modigliani-Miller world with taxes and a corporate tax rate of 35%. There is no growth of the EBIT and the 40 Euros of debt are perpetual. a) What is the market value of the tax savings? What...
ABC Corporation Ltd. is planning to value a firm on the basis of DCF valuation technique. Perform Valuation using below inputs. Year 2019 2020 2021 2022 Growth Rate 8% 15% 15% 10% EBIT (1-t) 300 320 340 230.20 Capex 100 120 130 50 Cost of Equity 13% 13% 13% 13% Cost of Debt 8% 8% 8% 8% Debt Ratio 25 25 25 25 Return on Capital 30 30 30 20