Calculate the FCF for a firm if it has operating cash flows of 800, CAPEX of 280, and a change in NWC of -24. Assume a tax rate of 40%. Hint: Even if an input value is negative, you still apply the formula with the minus signs. FCF = operating CF - CAPEX - change in NWC Also a reminder, FCF = CF from assets
Q: What is the "simple" formula for ROE? Would we prefer this number to be larger or smaller to make…
A: The correct formula for Return on Equity (ROE) is:ROE = To make shareholders happy, we would prefer…
Q: KADS, Incorporated, has spent $400,000 on research to develop a new computer game. The firm is…
A: Cash Flow from the project is that amount which is earned by the investor from the project. It…
Q: 8. If the CAPM is valid, is the following situation possible? Portfolio A B Expected Return 5% 40%…
A: Capital Asset Pricing Model:It is a financial model that estimates an investment's or asset's…
Q: You have just won a two-part lottery! The first part will pay you $50,000 at the end of each of the…
A: The idea of present value suggests that the worth of a future sum of money is lower compared to its…
Q: You are considering the purchase of one of two machines used in your manufacturing plant. Machine A…
A: Equivalent annual cost(EAC)Making a decision between projects with different lifespan requires the…
Q: 4. Convertible bonds: a. Allow the security holder to convert the bond into cash at any time during…
A: As per our guidelines we are supposed to answer only one question (if there are multiple questions…
Q: 30. Redstar Air plans to issue a $1000 par value, 12-year, quarterly (i.e., 4 times per year)…
A: Bond price is the present value of cashflows from the bond. Cashflows from the bond includes coupon…
Q: A stock's return has the following distribution: Demand for the Company's Products Probability of…
A: Expected Return is that which is earned by the investor from the stock. If the investor is invest…
Q: m 3. Assume that r, = .02, E(R)= .06, and σ = .04 where m denotes the tangency (or market)…
A: The given details are:Risk-free rate: 2%Expected return on market portfolio [E(Rm)]: 6%The standard…
Q: Give typing answer with explanation and conclusion Q87. You are considering two investments.…
A: APR stands for annual percentage rate and it is the stated rate or the nominal rate which is 10% for…
Q: Your firm needs a computerized machine tool lathe which costs $50,000 and requires $12,000 in…
A: Salvage value refers to the estimated residual value or worth of an asset at the end of its useful…
Q: What is the arithmetic mean of the following investme Assets at Beginning HPR Assets before Net…
A: PeriodValues 0 $ 100.001 $ 111.002 $ 125.443 $ 142.224 $ 123.695 $ 134.82To Find:Arithmetic mean
Q: Suppose a seven-year, $1,000 bond with a coupon rate of 8.1% and semiannual coupons is trading with…
A: a) Yield to maturity (YTM) of the bond is the rate which investors will earn if the bond is held…
Q: A company is considering a $150,000 investment in machinery with the following net cash flows. The…
A: NPV net present value can be found as the difference between present value of cash flow and initial…
Q: 1) If ABC's annual tuition increases by 8% per year, approximately how much will the annual tuition…
A: To calculate the annual tuition for Matthew during his freshman year, we need to consider the…
Q: Lush Gardens Co. bought a new truck for $50,000. It paid $5,500 of this amount as a down payment and…
A: When the borrower borrows a loan from the borrower, he has to pay a rate of interest on the borrowed…
Q: Bill Petty, 56, just retired after 31 years of teaching. He is a husband and father of two children…
A: The money and resources that a person or family receives during their retirement years are referred…
Q: A firm has expected cash flows next year of $1100 and expected interest expense of $250. The…
A: The APV method values the firm by considering the value of its unleveraged cash flows (or "firm…
Q: oo-fus Inc. is an Australian dog food producer specializing in kangaroo-based dog food. It is…
A: If purchasing power parity holds, the future exchange spot rate (Sn) is calculated as shown below.
Q: A project costs $1 million and has a base-case NPV of exactly zero (NPV = 0). Note: A negative…
A: To calculate the Adjusted Present Value (APV) of the project, we need to consider the impact of…
Q: Assume a $100,000 3/1 hybrid with a 30-year maturity and an initial rate of 6 percent. 1. Calculate…
A: Mortgage loans are secured loans and paid by the equal monthly payments that carry payment for…
Q: Q2. Consider 3 zero coupon bond: Maturity Yld 5 1.50% 10 1.75% 20 2.25% Q2a. calculate…
A: Bond Convexity refers to relation between the bond price and bond yields. It is used to measure…
Q: 8. If the CAPM is valid, is the following situation possible? Portfolio A B Expected Return 5% 40%…
A: Capital Asset Pricing Model determines the expected return of a stock as a function of beta…
Q: A firm paid dividends of $70 this year. Last year, they had $800 in equity. This year, they had $600…
A: Dividend paid = $70Last year equity = $800Current year equity = $600Additions to retained earnings =…
Q: Your firm has limited capital to invest and is therefore interested in comparing projects based on…
A: The bond price refers to the current market value of a bond, which represents the present value of…
Q: Suppose that we can describe the world using two states and that two assets are available, asset K…
A: The rate of return on an investment with no default risk is referred to as the "risk-free rate."…
Q: (Analyzing the quality of firm earnings) Kabutell, Inc. had net income of $750,000, cash flow from…
A: a. Net Income = $750,000 Cash flow from operating activities = $575,000 The quality of earnings…
Q: Market performance over the upcoming year (select one): Fantastic Return Good Return Flat Poor…
A: The future value refers to the value of an investment or asset at a specific point in the future,…
Q: Please show financial calculator inputs for this problem.…Your sister would like your help planning…
A: The use of financial calculator in form of an excel spreadsheet has been provided in this solution.…
Q: QUESTION 3 A company issued 50 bonds of P1,000 face value each, redeemable at par at the ends of 15…
A: Redemption Value is the amount to be paid at the time of Maturity to the holders of bond against the…
Q: Kale Inc. forecasts the free cash flows (in millions) shown below. Assume the firm has zero non-…
A: It is based on the concept that a stock's value is equal to the present value of all anticipated…
Q: A student takes out a loan of $1,500 at the beginning of each semester (semi-annually) for 11…
A: A loan is a financial agreement in which a lender gives a borrower a certain sum of money; the…
Q: Calculate the default risk premium for a security with equilibrium rate of return of 8 percent, an…
A: The expected or necessary rate of return on an investment that would cause the market to be in…
Q: Calculate the total asset turnover (sales / total assets) for the firm below. Do not convert to 2…
A: Ratio analysis can help with financial planning and forecasting. Businesses may forecast future…
Q: Suppose you manage a $5 million fund that consists of four stocks with the following investments:…
A: CAPM is capital asset pricing model being used in business. The main purpose is to calculate…
Q: Give typing answer with explanation and conclusion You have decided to renovate your suites in order…
A: Capital budgeting provides various modern methods for accepting or rejecting projects. One of the…
Q: If the interest rate is 15%, what is the present value of a security that pays you $1,100 next year,…
A: Time value of money is one of important concept being used in finance. As per this concept, a sum of…
Q: ABC Inc. is considering a project that has the following cash flow and WACC data. What is the…
A: Hi studentSince there are multiple questions, we will answer only first question.NPV means net…
Q: How much can be paid in scholarship at the beginning of each month if $231,500 is deposited in a…
A: The concept of present value indicates that the value of a future amount of money is less than its…
Q: Brandt Enterprises is considering a new project that has a cost of $1,000,000, and the CFO set up…
A: >Please refer to the below spreadsheet for calculation and answer. Cell reference was also…
Q: What was the wells fargo account fraud scandal? What illegal behavior was conducted?
A: The Wells Fargo account fraud scandal refers to a high-profile case involving Wells Fargo, one of…
Q: The Quick Buck Company is an all-equity firm that has been in existence for the past three years.…
A: When a company pays a dividend to its existing shareholders, the value of the share decreases by the…
Q: Your discount brokerage firm charges $8.30 per stock trade. How much money do you need to buy 340…
A: Discount brokers, also known as online brokers or low-cost brokers, are financial institutions that…
Q: Greta has risk aversion of A-3 when applied to return on wealth over a one-year horizon. She is…
A: An optimal portfolio is a portfolio of assets that maximizes an investor's expected return for a…
Q: An annuity and an annuity due with the same number of payments have the same future value if the…
A: Meaning of annuity and annuity due:Annuity-Ordinary annuity is an annuity, the payment of which is…
Q: A company issued 50 bonds of P1,000 face value each, redeemable at par at the ends of 15 years to…
A: At the end of 15 years, the company needs to pay the par value to the bondholders. Instead of paying…
Q: Suppose that the current one-year rate (one- year spot rate) and expected one-year T-bill rates over…
A: 1R1=6%, E(2r1) =7%, E(3r1) =7.5% E(4r1)=7.85%
Q: Calculate the ROE for a firm if it has a profit margin of 20%, an asset turnover of 2, and an equity…
A: Profit Margin = pm = 20%Asset Turnover = at = 2Equity Multiplier = em = 1.4
Q: What are the prices of a call option and a put option with the following characteristics? (Do not…
A: The Black-Scholes model, also known as the Black-Scholes-Merton model, is a mathematical model used…
Q: The local bank is currently offering a new investment product, where deposits earn interest…
A: The FV of an investment refers to the cumulative value of its cash flows assuming that they grow at…
Calculate the FCF for a firm if it has operating cash flows of 800, CAPEX of 280, and a change in NWC of -24. Assume a tax rate of 40%.
Hint: Even if an input value is negative, you still apply the formula with the minus signs. FCF = operating CF - CAPEX - change in NWC
Also a reminder, FCF = CF from assets
Step by step
Solved in 3 steps with 1 images
- Give typing answer with explanation and conclusion 27. EFN Define the following: S = Previous year’s sales A = Total assets E = Total equity g = Projected growth in sales PM = Profit margin b = Retention (plowback) ratio Assuming that all debt is constant, show that EFN can be written as EFN = −PM(S)b + [A − PM(S)b] × g Hint: Asset needs will equal A × g. The addition to retained earnings will equal PM(S)b × (1 + g).Take me to the text The following table indicates the net cash flows of a capital asset: Year Net Cash Flow 0 $-12,900 1 $4,100 2 $8,100 Do not enter dollar signs or commas in the input boxes. Use the negative sign where appropriate. Round the factor to 4 decimal places and the NPV to the nearest whole number. Assume the required rate of return is 9%. Determine the net present value of this asset. Year Net Cash Flow Factor Net Present Value $-12,900 0 1 2 Total $4,100 $8,100 SA $ 69Dalvi Incorporated is considering a new Investment. The table below lists the cash flows. Assume that the interest rate is 0%. Year Cash Flows 0 –$24,600 1 5,600 2 7,700 3 11,400 Find the NPV and IRR
- 2) What is mark-to-market accounting? a. Hint: Use an example to demonstrate the type of accounting Enron was engaging in. The following sequence of cash flows will be helpful. Assume a 10% discount rate. t = 0 t = 1 4,950.00 t = 2 9,680.00 t = 3 (25,000.00) 16,637.50 First, calculate the accounting income for each year (i.e., use historical cost accounting). Second, calculate the income using Enron's method (i.e., fair value accounting).Q) For a given company studies indicate that due to the nature of contract business, any excess funds generated are expected to earn at a rate of 11% per year. Use the ROIC method to determine the rate of return on invested capital value for the given cash flow series.(X0=$2,000, X1=$-900, X2=$-7,000, X3=$6,900) Explain it early but not in excel works. Typed or handwriting onlysYou've collected the following information about Groot, Inc.: Profit margin Total asset turnover Total debt ratio Payout ratio = 4.44% = 3.50 = .25 = 29% a. What is the sustainable growth rate for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the ROA? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Sustainable growth rate b. ROA % 15.54 %
- ne Internal rate of return For the project shown in the following table, , calculate the internal rate of return (IRR). Then indicate, for the project, the maximum cost of capital that the firm could have and still find the IRR acceptable. The project's IRR is %. (Round to two decimal places.) ts eText dia Librai Calculat Resaurce Emter vour amswer in the amswer box and then click Check Answer. ic Studiy Check Answer part memaiming Clear All Tiration Tiools > Ouestion 10 (0/1) Ouestion 11 (0/1). Question 12 (0/1) Question 9 (0/1) 5/1 Type Ihere to search insertAverage Rate of Return Method, Net Present Value Method, and Analysis for a service company The capital investment committee of Arches Landscaping Company is considering two capital investments. The estimated operating income and net cash flows from each investment are as follows: Front-End Loader Year 1 2 3 4 5 Total Year 1 2 3 4 5 6 7 Operating Income 8 9 10 $54,000 54,000 54,000 54,000 54,000 $270,000 0.943 Each project requires an investment of $600,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 10% for purposes of the net present value analysis. Present Value of $1 at Compound Interest 6% 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 10% Net Cash Flow 0.909 0.826 0.751 $172,000 172,000 172,000 172,000 172,000 $860,000 12% 0.893 0.797 0.756 0.712 0.658 0.683 0.636 0.572 0.621 0.567 0.497 0.564 0.507 0.513 0.467 0.424 0.386 0.452 0.404 15% 0.361 0.322 0.870 0.432 0.376 0.327 0.284 0.247 Operating Income…Jones Corp. had the following results for the period just ended; Sales P 2.0 million Net Income P 0.5 million; Capital Investment P 1.0 million To arrive at the return on investment, the following should be used: a. ROI = (20/20) X (20/5) c. ROI = (10/20) X (20/5) b. ROI = (20/10) X (5/20) d. ROI = (10/20) X (5/20)
- Take me to the text The following table indicates the net cash flows of a capital asset: Year Net Cash Flow 0 $-13,900 1 $5,500 2 $9,600 Do not enter dollar signs or commas in the input boxes. Use the negative sign where appropriate. Round the factor to 4 decimal places and the NPV to the nearest whole number. Assume the required rate of return is 13%. Determine the net present value of this asset. Year Net Cash Flow 0 1 2 Total $-13,900 $5,500 $9,600 Factor Net Present Value SA $ A(b) Find the time path of capital K(t) given the following rates of net investment flow functions (i) I(t) = 10t2 +5 K(0) = 50 (ii) I(t) = 18t5 - 2 K(0) = 24 (iii) I(t) = 30t4 K(0) = 35 %3D (iv) I(t) = 23t K(0) =15) Assuming a 9% cost of capital, find the modified internal rate of return for the following cash flows: a. 19.78% b. 6.95% c. 13.64% d. 7.86% Year Cash Flow 0 1 2 3 -$175 $167 $240 -$120