Calculate the value of firm and firm equity

Assignment Help Financial Management
Reference no: EM132044276

The MoMi Corporation’s income before interest, depreciation and taxes, was $2.9 million in the year just ended, and it expects that this will grow by 5% per year forever. To make this happen, the firm will have to invest an amount equal to 17% of pretax cash flow each year. The tax rate is 30%. Depreciation was $350,000 in the year just ended and is expected to grow at the same rate as the operating cash flow. The appropriate market capitalization rate for the unleveraged cash flow is 12% per year, and the firm currently has debt of $5 million outstanding. Use the free cash flow approach to calculate the value of the firm and the firm’s equity. (Enter your answer in dollars not in millions.)  

Value of the firm $

Value of the firm's equity $

Reference no: EM132044276

Questions Cloud

Calculate the spot opportunity loss or gain for the company : Calculate the spot opportunity loss or gain for the company and the futures gain or loss.
Cornell enterprises is considering project : Cornell Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV?
Market value of equity is equal to book value of equity : How would these accounts change in response to a 10 percent stock dividend? Assume market value of equity is equal to book value of equity.
Including interest charges and commitment fees : Calculate the cost of funds from this source, including interest charges and commitment fees.
Calculate the value of firm and firm equity : Use the free cash flow approach to calculate the value of the firm and the firm’s equity.
Days cash on hand and average payment period : Compute the following ratios for both years: current, quick, acid test, days in accounts receivable, days cash on hand, average payment period,
What will the par value per share be after the split : The company is planning a reverse stock split of 4-for-7. What will the par value per share be after the split?
Identify the trouble spots that the ratio analysis : Identify the trouble spots that the ratio analysis suggests and provide some insights on how these trouble spots can be corrected.
What is the company new cost of equity : Gamer Co. has no debt. Its cost of capital is 9.5 percent. What is the company’s new cost of equity?

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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