Business, 19.08.2020 20:01 prelogical
You have been asked by an investor to value a restaurant using discounted cash flow valuation. For the current year, the restaurant earned pretax operating income of $750,000. Income has grown 2% annually during the last five years, and is expected to continue growing at that rate for the next two years. Net operating working capital increased by $60,000 during the current year and current year capital spending on long-lived assets exceeded depreciation by $75,000. Both working capital and the excess of capital spending over depreciation are projected to grow at the same rate as operating income. Subsequent to the second year, you believe the pretax operating income growth rate will increase to 3% per year and remain at that level into the foreseeable future. The 10-year Treasury bond rate is 2.5%, the equity risk premium is 5.5%, and the marginal federal, state, and local tax rate is 35%. The restaurantâs beta and its target debt-to-equity ratio are 1.74 and 0.67, respectively. Its pretax cost of borrowing, based on its recent borrowing activities, is 9%. 1. What is the restaurantâs enterprise free cash flow in year 1?A. $352,500 B. $420,750 C. $427,500 D. $359,550 E. $436,0502. What is the restaurantâs enterprise free cash flow in year 2?A. $370,337 B. $359,550 C. $436,050 D. $366,741 E. $388,7453. What is the restaurantâs cost of equity?A. 14.5% B. 12.07% C. 7.72% D. 7.72% E. 9.13%4. What are the restaurantâs target capital structure weights?A. 50% debt; 50% equity B. 60% debt / 40% equity C. 67%debt/ 33% equity D. 40%debt/60% equity E. 33%debt/67%equity5. What is the restaurantâs weighted average cost of capital?a. 11.04% b.7.82% c. 9.58% d.6.97% e.9.17%6. What is the restaurantâs enterprise value?a. $4,143,678 b. $5,398,701 c. $5,062,483 d. $5,740,779 e. $5,414,420
Answers: 3
Business, 22.06.2019 01:00
In order to gauge public opinion about how to handle iran's growing nuclear program, a research group surveyed 1010 americans by telephone and asked them to rate the threat iran's nuclear program poses to the world on a scale of 1 to 10. describe the population, sample, population parameters, and sample statistics. identify the population in the given problem. choose the correct answer below.
Answers: 2
Business, 22.06.2019 12:10
This exercise illustrates that poor quality can affect schedules and costs. a manufacturing process has 130 customer orders to fill. each order requires one component part that is purchased from a supplier. however, typically, 3% of the components are identified as defective, and the components can be assumed to be independent. (a) if the manufacturer stocks 130 components, what is the probability that the 130 orders can be filled without reordering components? (b) if the manufacturer stocks 132 components, what is the probability that the 130 orders can be filled without reordering components? (c) if the manufacturer stocks 135 components, what is the probability that the 130 orders can be filled without reordering components?
Answers: 3
Business, 22.06.2019 15:50
Singer and mcmann are partners in a business. singer’s original capital was $40,000 and mcmann’s was $60,000. they agree to salaries of $12,000 and $18,000 for singer and mcmann respectively and 10% interest on original capital. if they agree to share remaining profits and losses on a 3: 2 ratio, what will mcmann’s share of the income be if the income for the year was $15,000?
Answers: 1
Business, 22.06.2019 17:50
Which of the following is an element of inventory holding costs? a. material handling costs b. investment costs c. housing costs d. pilferage, scrap, and obsolescence e. all of the above are elements of inventory holding costs.
Answers: 1
You have been asked by an investor to value a restaurant using discounted cash flow valuation. For t...
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