What is the value of company

Assignment Help Financial Management
Reference no: EM131552324

Your company has an expected unlevered, after-tax cash flow for the next two years of $281,000. Then (from year 3) it will decrease to $278,400, and stay constant forever. The company also has a constant debt of $4 million. The interest rate paid by the company is 2%. The unlevered return on equity is 8% and the corporate tax rate is 13%. What is the value of the company?

Reference no: EM131552324

Questions Cloud

Contemplating choices between using wire transfer and edt : The cash manager of Bronco is contemplating the choices between using wire transfer and EDT. She estimates that her investment opportunity rate is 10%.
What is the interest rate paid by the company : Assume perfect capital markets and no taxation. What is the interest rate paid by the company?
What must the forward price of the pound be for delivery : Suppose the spot price of the British pound is currently $1.75. what must the forward price of the pound be for delivery one year from now?
Portfolio that is invested in stocks plus risk-free asset : You have a $1000 portfolio that is invested in stocks A and B plus a risk-free asset. $175 is invested in stock A.
What is the value of company : Your company has an expected unlevered, after-tax cash flow for the next two years of $281,000. What is the value of the company?
Company uses cumulative voting procedures : If the company uses cumulative voting procedures, how much will it cost to guarantee yourself one seat on the board of directors?
Distinctions in forward contracts and futures contracts : List three key distinctions between forward contracts and futures contracts. What is the additional source of risk faced by investors in forward contracts?
What amount of unrealized gain or loss : What amount of unrealized gain or loss would it report on its financial statements?
What is holding-period return : In one year, promised yields to maturity have risen to 5.00%. What is your holding-period return?

Reviews

Write a Review

Financial Management Questions & Answers

  Affect the effectiveness of voluntary cooperative methods

What are the characteristics of the Lindahl Equilibrium for cooperative supply of a pure public good? How does the free-rider problem affect the effectiveness of voluntary cooperative methods in achieving efficient levels of output for pure public go..

  Foreign project generates a negative cash flow

When a U.S.-based MNC has a subsidiary in Mexico that needs financing, the MNC's exposure to exchange rate risk can be minimized if: A foreign project generates a negative cash flow in year 1 and positive cash flows in years 2 through 5. The NPV for ..

  Capital gains yield according to dividend growth model

In the constant dividend growth model, the expected return of a stock is comprised of two components. What are these two components? Which one of the following transactions occurs in the primary market? A particular stock is currently selling for $30..

  The securities act primarily concerned with

The securities act of 1933 is primarily concerned with.

  How many orders will it place per year

A company sells 157,441 units per year. Fixed costs per order are $125 and carrying cost is $28 per unit per year. If management uses an EOQ model, how many orders will it place per year?

  What is price per share of equity under plan

Lo Corp. is comparing two different capital structures. Plan I would result in 8,000 shares of stock and $80,000 in debt. Plan II would result in 6,000 shares of stock and $120,000 in debt. What is the price per share of equity under Plan I?

  Each year after retirement at each retirement age

If her investments continue to earn the same rate, how much will she be able to withdraw at the end of each year after retirement at each retirement age?

  Zero rate with continuous compounding

The annual continuously compounded 6-month and 1-year zero rates are 3% and 4%, respectively. A 1.5-year bond that pays coupons of $2 every six months currently sells for $98.52. What is the 1.5-year zero rate with continuous compounding? Show detail..

  Evaluate two types of deception one with which you agree

Evaluate two types of deception one with which you agree and one with which you disagree. Provide an example and rationale for each type.

  Compute the z score for each company

Compute the Z score for each company.- According to the Altman model, which of these firms is most likely to experience financial failure?

  What is the required return of portfolio

Portfolio beta If you expect the market to earn 11.40 percent and the risk-free rate is 6.00 percent, what is the required return of the portfolio?

  What is the bonds price per face value

Watters Umbrella Corp. issued 15-year bond two years ago at a coupon rate of 6.8 percent. The bonds make semi annual payments. What is the bonds price per $100 face value? If these bonds currently sell for 105 percent of par value, what is the YTM?

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