What is the value of the firm

Assignment Help Financial Management
Reference no: EM13849966

You are going to value Lauryn’s Doll Co. using the FCF model. After consulting various sources, you find that Lauryn has a reported equity beta of 1.6, a debt-to-equity ratio of .3, and a tax rate of 30 percent. Assume a risk-free rate of 5 percent and a market risk premium of 11 percent. Lauryn’s Doll Co. had EBIT last year of $50 million, which is net of a depreciation expense of $5 million. In addition, Lauryn made $6.5 million in capital expenditures and increased net working capital by $3.4 million. Assume her FCF is expected to grow at a rate of 3 percent into perpetuity. What is the value of the firm?

Reference no: EM13849966

Questions Cloud

Use molecular orbital theory to predict : Use molecular orbital theory to predict whether the bond order in the superoxide ion, O2-, should be higher or lower than the bond order in neutral O2 molecule.Is the bond order of O2- higer or lower than that of O2?
Using the information in the t-accounts classified balance : The Prepaid Expense account includes a two-year insurance policy purchased on January1, 2015 for $12,000. Claudia has been properly recognizing insurance expense eachmonth (up through August).
A particle with the mass of a proton is trapped in a box : A particle with the mass of a proton is trapped in a box. The particle falls from the state to the state and emits 0.16 meV of energy. What is the size of the box?  (nm
Determine the minimum electric potential difference : Determine the minimum electric potential difference (in volts) that must be applied to accelerate an a-particle so that on interaction with a hydrogen atom, a ground state electron will be excited to n = 6
What is the value of the firm : You are going to value Lauryn’s Doll Co. using the FCF model. After consulting various sources, you find that Lauryn has a reported equity beta of 1.6, a debt-to-equity ratio of .3, and a tax rate of 30 percent. Assume a risk-free rate of 5 percent a..
Summaries article relevant to immigrant or refugee group : At least five internet sites and/or articles that you have found to locate the necessary information about your chosen group; include a summary about each source that explains the information available from the source
Zero estimated salvage value on straight-line basis : Mom’s Cookies, Inc., is considering the purchase of a new cookie oven. The original cost of the old oven was $41,000; it is now five years old, and it has a current market value of $18,000. The old oven is being depreciated over a 10-year life toward..
Accumulated on the day that he retires : After retirement, Mario expects to live another 25 years. If he requires $120,000 at the end of each year and interest rates are 7%, how much will Mario need to have accumulated on the day that he retires?
Critical components of the affordable care act : Use the Internet or Strayer databases to assess critical components of the Affordable Care Act, and predict the economic impact of those components on the overall U.S. healthcare system over the next decade

Reviews

Write a Review

 

Financial Management Questions & Answers

  Futures price on a particular stock-index portfolio

The one-year futures price on a particular stock-index portfolio is 406, the stock index currently is 400, the one-year risk-free interest rate is 3%, and the year-end dividend that will be paid on a $400 investment in the index portfolio is $5.

  What is the free cash flow for 2013

What is the free cash flow for 2013 and Suppose Congress changed the tax laws so that Berndt's depreciation expenses doubled. No changes in operations occurred. What would happen to reported profit and to net cash flow

  The weighted average cost of capital for a risky

All else constant, the weighted average cost of capital for a risky, levered firm will decrease if:

  Calculate the value of share of stock

Using the P/E ratio approach to valuation, calculate the value of a share of stock.

  Initial investment outlay

Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $18 million, and production and sales will require an initial $4 million investment in net operating working capital. The company's tax rate is 30%. W..

  Calculate the return the stock had at time of margin call

An investor buys $8,000 worth of a stock priced at $40 per share using 50% initial margin. The broker charges 6% on the margin loan and requires a 30% maintenance margin. In one year the investor gets a margin call.

  What is its cash cycle

A firm has an inventory turnover of 8.11, an inventory period of 45 days, average inventory of $650,000, a receivables period of 32 days, and average payables of $750,000. What is its cash cycle?

  Globalization of financial and stock markets

Explain several important events or changes that contributed to the globalization of financial and stock markets and how have these changes affected thecapital structureof MNCs

  An investor has two bonds in his portfolio

An investor has two bonds in his portfolio that both have a face value of $1,000 and pay a 8% annual coupon. Bond L matures in 19 years, while Bond S matures in 1 year. Assume that only one more interest payment is to be made on Bond S at its maturit..

  What is the current price of the bond

What is the current price of the bond if the comparable rate of interest is 8 percent?

  What is the amount of the last dividend paid

Weisbro and Sons common stock sells for $34 a share and pays an annual dividend that increases by 3.0 percent annually. The market rate of return on this stock is 10.70 percent. What is the amount of the last dividend paid by Weisbro and Sons?

  Why do you think economics gets a bad rap

Economics has a notoriously bad reputation among students. They assume it will be dry, boring, and not relevant to their lives. They also think it's hard because the course content must be understood rather than memorized. Why do you think economics ..

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