What is the current value of operations

Assignment Help Financial Management
Reference no: EM13947464

A company forecasts free cash flow next year to be -$5 million, $12 million in two years, and $16 million in 3 years. Thereafter, free cash flow is projected to grow at a constant rate of 4% per year forever. If the overall cost of capital is 16%, what is the current value of operations, to the nearest million?

Reference no: EM13947464

Questions Cloud

What are the likely effects on japanese shipbuilders : What are the likely effects on Japanese shipbuilders of a yen appreciation to ¥180 = $1? The South Korean won has maintained its dollar value.
Write the queries to report the details of the want_ad table : Write the queries to report the details of the WANT_AD table of the CLASSMATE schema. Save teh script in a file.
Considered to be the safest investment : Which one of these is considered to be the safest investment? The idea that investors in a common stock may expect a lower total return if they purchase a stock with limited price volatility rather than one with high price volatility suggests that:
Extended surface of rectangular cross section : Consider an extended surface of rectangular cross section with heat flow in the longitudinal direction. W/m2 · K. What is the temperature of the rod 25, 50, and 100 mm from the casting?
What is the current value of operations : A company forecasts free cash flow next year to be -$5 million, $12 million in two years, and $16 million in 3 years. Thereafter, free cash flow is projected to grow at a constant rate of 4% per year forever. If the overall cost of capital is 16%, wh..
Regarding currency futures contracts and forward contracts : Which of the following statements regarding currency futures contracts and forward contracts is NOT true?
Review case american oil company : Review Case "American Oil Company" (Groebner p.254). Make the necessary computations and write a short report discussing your answers and findings.
Explain the parts of the business plan : Explain the parts of the business plan
Neural network show from sources like , my md''s office, dm : What kind of patterns might the neural network show from sources like , my MD's office, the DMV?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the value of this stock today at a discount rate

Newcomer Mills is a relatively new firm which will retain all of its earnings for the next four years. Four years from now, the firm expects to pay its first dividend of $0.25 a share. After that, it intends to increase the dividend by 4 percent annu..

  Receive a credit card application

You receive a credit card application from Shady Banks Savings and Loan offering an introductory rate of 2.8 percent per year, compounded monthly for the first six months, increasing thereafter to 17 percent compounded monthly.

  Capital structure-maximzes stock price-shareholder value

As with all financial decisions, a firm should try to set a capital structure that maximzes the stock price, or shareholder value. This is called the optimal capital strucutre; it is also the debt-equity mix that: Review the list and indentify which ..

  Calculate the updated NAV of the fund

Suppose today a mutual fund contains 2,000 shares of JP Morgan Chase, currently trading at $46.75; 1,000 shares of Walmart, currently trading at $70.10; and 2,500 shares of Pfizer, currently trading at $27.50. Calculate the updated NAV of the fund if..

  Current value-calculate the yield-to-maturity

What is the current value of a $1,000 par value perpetual bond to an investor who requires a 10 percent annual rate of return? The perpetual bond pays inter- est at the rate of 8 percent per year. Cellular International zero coupon bonds (par value $..

  Capital budgeting analysis

The Stanley Stationery Shoppe wishes to acquire The Carlson Card Gallery for $300,000. Stanley expects the merger to provide incremental earnings of about $51,000 a year for 10 years. Ken Stanley has calculated the marginal cost of capital for this i..

  Mortgage payments are treated as an ordinary annuity

You are planning to buy a house appraised for $350,000 and finance it through a mortgage of $250,000. You would then have a loan-to-value ratio of 0.714, safely below the cutoff by your lender of 0.80. What is the amount that you will pay per month i..

  How much money will you have in your account in six years

If you invest $820 today at an interest rate of 8.81 percent compounded daily, how much money will you have in your account in six years? Round the answer to two decimal places.

  The issue will pay an annual dividend

E-Eyes.com Bank just issued some new preferred stock. The issue will pay an annual dividend of $16 in perpetuity, beginning 5 years from now. If the market requires a return of 3.0 percent on this investment, how much does a share of preferred stock ..

  What constant rate is the stock expected to grow

Mitts Cosmetics Co.'s stock price is $35.62, and it recently paid a $1.50 dividend. This dividend is expected to grow by 30% for the next 3 years, then grow forever at a constant rate, g; and rs = 14%. At what constant rate is the stock expected to g..

  How much is the bonds face value-bonds coupon

You are considering purchasing a 15-year 8% unsecured bond at a price of $960: How much is the bonds face value? How much is the bonds coupon? What is the bonds current yield?

  What is the maximum possible gain the writer of a strangle

What is the maximum possible loss the purchaser of a strangle can achieve using these options? What is the maximum possible gain the writer of a strangle can incur? Locate the breakeven point(s) of the strangle.

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