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Assume that today is December 31, 2012, and that the following information applies to Vermeil Airlines:
After-tax operating income [EBIT(1 - T)] for 2013 is expected to be $700 million. The depreciation expense for 2013 is expected to be $90 million. The capital expenditures for 2012 are expected to be $450 million. No change is expected in net operating working capital. The free cash flow is expected to grow at a constant rate of 7% per year. The required return on equity is 16%. The WACC is 10%. The market value of the company's debt is $4 billion. 180 million shares of stock are outstanding.
Using the corporate valuation model approach, what should be the company's stock price today?
The real risk-free rate is 2%. Inflation is expected to be 3% this year, 4% next year, and then 3.5% thereafter. The maturity risk premium is estimated to be 0.0005 × (t -1), where t = number of years to maturity.
Baba Company is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year: Beginning Balance Ending Balance Raw materials
If Stock X has an expected return of 15.35 percent and a beta of 1.55, and Stock Y has an expected return of 9.4 percent and a beta of 0.7, how much money will you invest in Stock Y
Calculate the fair present values of the following bonds, all of which pay interest semiannually, have a face value of $1,000, have 10 years remaining to maturity, and have a required rate of return of 11 percent.
What is the semiannual payment to finance $200,000 in a sinking fund that pays 12% annual interest. Also, calculate the total deposits of the sinking fund and the interest earned by the semiannual payment.
A Firm with a 14% WACC is evaluating two projects for this year's capital budget. After tax cash flows, including depreciation are as follows; Project A; -6,000 , 2,000, 2,000, 2,000, 2,000, 2,000
You have found a Toyota Sienna priced at 34,400. The dealer has told you that if you can come up with a down payment of 3,300, he would be willing to finance the balance at an EAR of 5.65%.
Calculate the price of a zero coupon bond that matures in 23 years if the market interest rate is 4.2 percent.
The remainder was paid within the 30-day term. At the end of the annual accounting period, December 31, 2010, 90% of the merchandise had been sold and 10% remained in inventory. The company uses a periodic system.
The real risk-free rate is 3%, and inflation is expected to be 2% for the next 2 years. A 2-year Treasury security yields 7.5%. What is the maturity risk premium for the 2-year security
Pat Maninen earns a gross salary of $2,100 each week. Assume a rate of 6.2% on $106,800 for Social Security and 1.45% for Medicare. What are Pat's first week's deductions for Social Security and Medicare
Suppose you are going to receive $14,000 per year for 9 years. The appropriate interest rate is 11 percent. What is the present value of the payments if they are in the form of an ordinary annuity
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