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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 1.5, a debt-to-equity ratio of .4, and a tax rate of 30 percent. Assume a risk-free rate of 5 percent and a market risk premium of 7 percent. Lauryn’s Doll Co. had EBIT last year of $46 million, which is net of a depreciation expense of $4.6 million. In addition, Lauryn made $6.25 million in capital expenditures and increased net working capital by $3.6 million. Assume her FCF is expected to grow at a rate of 3 percent into perpetuity. What is the value of the firm? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. Omit the "$" sign in your response.)
Firm value $ million
In the above table, find the Treasury bond that matures in May 2039. What is the asked price of this bond in dollars?
You are contemplating a business venture, which involves an initial investment of $150,000 followed by an additional investment of $30,000 at the end of first year and $20,000 at the end of 2nd year. You want to analyze the venture over a project lif..
Tell Me Why Co. is expected to maintain a constant 6.8 percent growth rate in its dividends indefinitely. If the company has a dividend yield of 8.6 percent, what is the required return on the company’s stock?
Cascade Water Company (CWC) currently has 30,000,000 shares of common stock out- standing that trade at a price of $42 per share. CWC also has 500,000 bonds outstanding that currently trade at $923.38 each. CWC has no preferred stock outstanding and ..
If Marty were to die, Mary would go back to school part-time to upgrade her training as a nurse. This would cost $20,000. They have a mortgage on their home with a balance of $55,000. How much life insurance should they purchase for Marty?
The management of Hinrichs corporate is concerned because survey data suggest that many potential customers do not buy vehicles due to quality concerns it is considering taking the bold step of increasing the length of its warranty from the industry ..
Florida Groves has a $250,000 bond issue outstanding that is selling at 102 percent of face value. The firm also has 2,000 shares of preferred stock valued at $38 a share and 45,000 shares of common stock valued at $24 a share. What weight should be ..
The current price of a stock is $15. In 6 months, the price will be either $20 or $11. The annual risk-free rate is 4%. Find the price of a call option on the stock that has a strike price of $14 and that expires in 6 months.
If this is the way you decide to revise your portfolio, what will the set of weights in your revised portfolio be? - what set of weights would give you an expected 12% return?
Consider 8.5 percent Swiss franc/U.S. dollar dual-currency bonds that pay $666.67 at maturity per SF 1,000 of par value. It sells at par. What is the implicit SF/$ exchange rate at maturity? Will the investor be better or worse off at maturity if the..
You can deposit $11,000 into an account paying 7% annual interest either today or exactly 10 years from today. ow much better off will you be at the end of 35 years if you decide to make the initial deposit today rather than 10 years from today?
The total return an investor can expect to earn from a stock next year can be calculated as the
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