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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 1.6, a debt-to-equity ratio of .6, and a tax rate of 40 percent. Assume a risk-free rate of 6 percent and a market risk premium of 8 percent. Lauryn’s Doll Co. had EBIT last year of $53 million, which is net of a depreciation expense of $5.3 million. In addition, Lauryn made $4.75 million in capital expenditures and increased net working capital by $3.1 million. Assume her FCF is expected to grow at a rate of 2 percent into perpetuity. What is the value of the firm?
Bola has accumulated $50,000 in her thrift savings plan at her job at the Federal Aviation Administration. The government puts in 1% of her pay and matches up to another 4% if she puts in 5% out of her pay. Bola earns $90,000 a year and plans to add ..
Johnson Tire Distributors has an unlevered cost of capital of 13 percent, a tax rate of 34 percent, and expected earnings before interest and taxes of $1,700. The company has $3,200 in bonds outstanding that have a 6 percent coupon and pay interest a..
Preferred stock can be callable. Preferred stock generally has a stated liquidation value of $1,000 per share. Dividend payments to preferred shareholders are tax-deductible expenses for the issuing firm.
Approximately how many years are needed to double a $100 investment when interest rates are 4.50 percent per year? (Round your answer to 2 decimal places.)
Your landscaping company can lease a truck for $8,900 a year for 6 years. It can instead buy the truck for $45,000. The truck will be valueless after 6 years. What is the present value of the lease payments if the opportunity cost of capital is 7%? I..
A search of the Internet for a stock and bond of your choice that has historical data performance measures that you can evaluate for the last twenty years. Once you have completed your evaluation please explain your findings and which option would ha..
We want to retire in 30 years, and we shall need $50,000 income per annum during our retirement which wills last 20 years. We can save $10,000 annually during the first 10 years. We would like to know what the pension fund should be to finance our re..
Which information is more valuable to marketing managers—information from internal databases, from marketing intelligence, or from marketing research?
Filer Manufacturing has 8.3 million shares of common stock outstanding. The current share price is $53, and the book value per share is $4. Filer Manufacturing also has two bond issues outstanding. Assume that the overall cost of debt is the weighted..
The Varner Corp. common stock's current dividend (D0) is $4.00, and the expected growth rate is 10 percent. if you require a rate of return of 20 percent, then what is the highest price you should be willing to pay for this stock?
Consider three bonds with 8% coupon rates, all selling at face value. The short-term bond has a maturity of 4 years, the intermediate-term bond has maturity 8 years, and the long-term bond has maturity 30 years. What will be the price of each bond if..
Assume you purchased a high-yield corporate bond at its current market price of $925 on January 2, 2004. It pays 6.75 percent interest and it will mature on December 31, 2013, at which time the corporation will pay you the face value of $1,000. (a) D..
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