What is the present value of a cash flow stream of $1,000 per year annually for 15 years that then grows at 2.0 percent per year forever when the discount rate is 8 percent? (Round intermediate calculations and final answer to 2 decimal places.)
A security analyst has regressed the monthly returns on Exxon Mobil equity shares over the past five years against those on the Standard & Poor’s 500 stock index over the same period. The resulting regression equation is rEM = 0.02 + 0.74rSP. Use this equation and any other information you deem appropriate to estimate Exxon Mobil’s equity beta. (Round your answer to 2 decimal places.)
Estimate the target firm’s asset beta. (Round your answer to 2 decimal places.)
Estimate the target’s unlevered, or all-equity, cost of capital (KA). (Round your answer to 1 decimal place.)
Estimate the target’s all-equity present value. (Enter your answer in millions rounded to 2 decimal places.)
Estimate the present value of the interest tax shields on the acquisition debt discounted at KA. (Round intermediate calculations to 1 decimal place. Enter your answer in millions rounded to 2 decimal places.)
Estimate an asset beta for Sinaloa Appliance. (Round intermediate calculations and final answer to 3 decimal places.)
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What is the present value of a cash flow stream of $1,000 per year annually for 15 years that then grows at 2.0 percent per year forever when the discount rate is 8 percent? (Round intermediate calculations and final answer to 2 decimal places.)
For each of the following, compute the present value (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.): Imprudential, Inc., has an unfunded pension liability of $582 million that must be paid in 20 years. To assess the value of the firm’s stock, financial analysts want to discount this liability back to the present. If the relevant discount rate is 7.5 percent, what is the present value of this liability? (Enter your...
DataPoint Engineering is considering the purchase of a new piece of equipment for $210,000. It has an eight-year midpoint of its asset depreciation range (ADR). It will require an additional initial investment of $110,000 in nondepreciable working capital. $27,000 of this investment will be recovered after the sixth year and will provide additional cash flow for that year. Income before depreciation and taxes for the next six are shown in the following table. Use Table 12–11, Table 12–12. Use Appendix B for an approximate...
A firm offers terms of 2/15, net 45.a.What effective annual interest rate does the firm earn when a customer does not take the discount? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)b.What effective annual interest rate does the firm earn if the discount is changed to 3 percent? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)c.What effective annual interest rate...
For each of the following, compute the present value: (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)2021-03-30.png
What is the present value of $3,525 per year, at a discount rate of 10 percent, if the first payment is received 7 years from now and the last payment is received 25 years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
What is the present value of the following cash-flow stream if the interest rate is 5%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Year Cash Flow 1 $ 250 2 450 3 350 Present value $
Compute the present value of an $850 payment made in ten years when the discount rate is 12 percent. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present Value
A.) What is the firm's market value capital structure? (Do not round intermediate calculations; round your answers to 4 decimal places). B.) If the company is evaluating a new investment project that has the same risk as the firm's typical project, what rate should the firm use to discount the project's cash flows? (Do not round intermediate calculations; enter your answer as a percent rounded to 2 decimal places). Hankins Corporation has 6.7 million shares of common stock outstanding, 240,000...
Assume the appropriate discount rate for the following cash flows is 8.8 percent. Year Cash Flow $1,400 1.300 1,000 800 What is the present value of the cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value
Compute the present value of an $1,500 payment made in nine years when the discount rate is 11 percent. (Do not round intermediate calculations. Round your answer to 2 decimal places.)