Calculate the value of the jones equity

Assignment Help Finance Basics
Reference no: EM13278944

Private equity investors are planning to provide financing to Jones Machinery and has approached your firm to perform a valuation assessment of Jones. Jones Machinery has 3 million shares outstanding and a target capital structure consisting of 30 percent debt. The debt interest rate is 8 percent. Assume that the risk-free rate of interest is 3 percent and the return on the market is 9 percent. Jones' historical free cash flow has averaged $4 million per year and is expected to grow at a constant rate of 5 percent a year; its beta is 1.2. Jones has $6 million in debt. The tax rate of Jones Machinery is 18 percent. a. Calculate the required rate of return on equity using CAPM for Jones b. Calculate weighted average cost of capital of Jones c. Calculate the value of operations of Jones d. Calculate the value of the Jones' equity.

Reference no: EM13278944

Previous Q& A

  What is the radius of the drop

A spherical drop of water carrying a charge of 11 pC has a potential of 590 V at its surface (with V = 0 at infinity). What is the radius of the drop

  What is the expected capital gains yield

What is the dividend yield? (Round your answer to 2 decimal places. What is the expected capital gains yield?

  Evaluate the solubility of ammonia gas in water

Calculate the solubility (in M units) of ammonia gas in water at 298 K and a partial pressure of 7.50bar . The Henry's law constant for ammonia gas at 298 K is 58.0 M atm and 1 bar = 0.9869 atm.

  Calculate the equivalent resistance-reactance and impedance

The following tests are performed on a single phase transformer rated 30/6.3 KV , 10 MVA , 50 HZ i- Short circuit test with L.V side short circuited and measurement made on H.V side I = I full load , V = 2700 V , P 80 KW

  What is the firm optimal capital budget

The firm's corporate cost of capital is 14 percent. project cost irr a $20000 17% b $15000 16% c $12000 15% d $18000 13% a. What is the firm's optimal capital budget?

  Calculate npv and irr for each machine

These cash flows include depreciation expenses. Calculate NPV and IRR for each machine and select the best choice for the MIT Whitehead Institute.

  Specify truth table for rom together with line converters

The 32 X 6 ROM together with the 2^0 line converts a 6-bit binary number to its corresponding 2-digit BCD number. For example, binary 100001 converts to BCD 011 0011 (decimal 33). Specify the truth table for the ROM.

  Explain what is the potential at the center of the sphere

What is the potential at the center of the sphere, if we take the potential to be zero infinitely far from the sphere

  Maximize staff availability and career expectations

Describe a scenario in which an MNE would maximize staff availability and career expectations, ROI, and knowledge transfer through an international assignment. Please be as creative as you like.

  Estimate the investment in receivables

estimate the investment in receivables if net sales were $1,300,000 in 2011 d. how much of a change in the 2011 receivables occurred?


Write a Review


Similar Q& A

  Compute average annual rate of return

Suppose you are considering how to finance your child's college education. The child is 3 years old now so there are 15 years to go before your child enters college at age eighteen.

  Long-term financial management decisions

About 67% of the acquisitions of other companies result in losses to the acquiring firms stockholders. Since it is well documented that most acquisitions are financial failures, why do firms continue to purchase other firms?

  Determining best evaluation of company-s cost of equity

If stock sells for $39 per share, Determine your best evaluate of company’s cost of equity? Answer in a %.

  Computation of pi, npv and irr

Computation of PI, NPV, IRR and Payback period of the two projects and decision making

  Knowledge about corporate finance

A corporation has decided to provide the pension for key employee who is scheduled to retire in 12 years-What should the annual payments be in order to fund this pension?

  Calculate the present values of investment using future

Calculate the present values of investment using future values investments returns

  Estimating required return on stocks

Stock A has a beta of .8, Stock B has a beta of 1, and Stock C has a beta of 1.2. Portfolio P has similar amounts invested in each of three stocks.

  What is the amount of the endowment required

What is the amount of the endowment required to establish the center and supply the funds to maintain this center forever?

  Sources of financing

Identify potential domestic and international sources of financing for your global venture project. Examine the role of external governance and its impact to the organization.

  Which one of the following is a drawback of cash dividends

Which one of the following is a drawback of cash dividends?

  Find npv, irr and mirr for the project

The project would cost the firm $145,000. If the firm's cost of capital is 11%, find NPV, IRR and MIRR for the project. Do you accept this project? Why?

  Capital budgeting analysis

Empirical evidence shows that financial market value movements are essentially random. This is evidence that:

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd