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| FCFF = EBIT*(1-tax rate)+Depreciation- Capex- Chng. In Work. Cap. | |||
| FCFF = 2400000*(1-0.35)+289000-289000-47000 | |||
| FCFF = 1513000 |
| firm or enterprise value = FCF in 1 year/(WACC - growth rate) |
| Firm/enterprise value = 1513000/ (0.08 - 0.06) |
| Firm/enterprise value = 75650000 |
Need help answering this question. Thanks for the help! Victoria Enterprises expects earnings before interest and...
P 10-2 (similar to) : Question Help Victoria Enterprises expects earnings before interest and taxes (EBIT) next year of $2.1 million. Its depreciation and capital expenditures will both be $287,000, and it expects its capital expenditures to always equal its depreciation. Its working capital will increase by $54,000 over the next year. Its tax rate is 40%. If its WACC is 8% and its FCFs are expected to increase at 5% per year in perpetuity, what is its enterprise value?...
Victoria Enterprises expects earnings before interest and taxes (EBIT) next year of $ 1.4 million. Its depreciation and capital expenditures will both be $ 291,000 and it expects its capital expenditures to always equal its depreciation. Its working capital will increase by $51,000 over the next year. Its tax rate is 30 % If its WACC is11 %and its FCFs are expected to increase at 6 %per year in perpetuity, what is its enterprise value?
Victoria Enterprises expects earnings before interest and taxes (EBIT) next year of $2.1 million. Its depreciation and capital expenditures will both be $297,000, and it expects its capital expenditures to always equal its depreciation. Its working capital will increase by $55,000 over the next year. Its tax rate is 35%. If its WACC is 9% and its FCFs are expected to increase at 3% per year in perpetuity, what is its enterprise value? The company's enterprise value is? (Round to...
Victoria Enterprises expects earnings before interest and taxes (EBIT) next year of $2 million. Its depreciation and capital expenditures will both be $290,000, and it expects its capital expenditures to always equal its depreciation. Its working capital will increase by $46,000 over the next year. Its tax rate is 35%. If its WACC is 10% and its FCFs are expected to increase at 6% per year in perpetuity, what is its enterprise value? The company's enterprise value ound to the...
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Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: Year FCF ($ million) 12 51.6 66.4 4 75.4 5 81.2 77.1 Thereafter, the free cash flows are expected to grow at the industry average of 3.9% per year. Using the discounted free cash flow model and a weighted average cost of capital of 14.7%: a. Estimate the enterprise value of Heavy Metal....
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Castle View Games would like to invest in a division to develop software for a soon-to-be-released video game console. To evaluate this decision, the firm first attempts to project the working capital needs for this operation. Its chief financial officer has developed the following estimates (in millions of dollars): (To copy the table below and use in Excel, click on icon in the upper right corner of table.) Year 1 Year 3...
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Elmdale Enterprises is deciding whether to expand its production facilities. Although long-term cash flows are difficult to estimate, management has projected the following cash flows for the first two years (in millions of dollars): 2 Year 1 124.3 45.7 29.5 2.4 26.8 35% Year 2 167.8 63.3 37.9 Revenues COGS and Operating Expenses (other than depreciation) Depreciation Increase in Net Working Capital Capital Expenditures Marginal Corporate Tax Rate 8.6...
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OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $495 million, and will operate for 20 years. Open Seas expects annual cash flows from operating the ship to be $70.3 million and its cost of capital is 12.3%. a. Prepare an NPV profile of the purchase. b. Identify the IRR on the graph. c. Should Open Seas proceed with the purchase? d. How far off...
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Daily Enterprises is purchasing a $10.1 million machine. It will cost $49,000 to transport and install the machine. The machine has a depreciable life of five years using straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of $4.1 million per year along with incremental costs of $1.2 million per year. Daily's marginal tax rate is 35%. You are forecasting incremental free cash flows for...
Question 2 USF Inc., a firm in the travel business, reported earnings before interest and taxes of $60 million last year, but you have uncovered the following additional items of interest: 1. The firm had operating lease expenses of $50 million last year and has a commitment to make equivalent payments for the next 8 years. 2. The firm reported CAPEX of $30 million and depreciation of $50 million last year. The firm also made two acquisitions one funded with...