Problem 9-11he following is a four-year forecast for Torino Marine.YearFree cash flow ($ millions)2022-59a. Fair market valueb. Fair market value per share202380202497. Estimate the fair market value of Torino Marine at the end of 2021. Assume that after 2025, earnings before interest and tax willremain constant at $200 million, depreciation will equal capital expenditures in each year, and working capital will not change.Torino Marine's weighted-average cost of capital is 12 percent and its tax rate is 40 percent.Note: Do not round Intermediate calculations. Enter your answer in millions rounded to 1 decimal place.million2025119. Estimate the fair market value per share of Torino Marine's equity at the end of 2021 if the company has 44 million sharesoutstanding and the market value of its interest-bearing liabilities on the valuation date equals $340 million.Note: Do not round Intermediate calculations. Round your answer to 2 decimal places.

Fair value is the value that can be obtained from the free cash flow and based on the cost of…

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Cornerstones of Financial Accounting

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ISBN:9781337690881

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Publisher:Jay Rich, Jeff Jones

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The following is a four-year forecast for Torino Marine. Year 2022 2023 2024 2025 Free cash flow ($ millions) −60 81 98 120 Estimate the fair market value of Torino Marine at the end of 2021. Assume that after 2025, earnings before interest and tax will remain constant at $200 million, depreciation will equal capital expenditures in each year, and working capital will not change. Torino Marine’s weighted-average cost of capital is 13 percent and its tax rate is 20 percent. Note: Do not round intermediate calculations. Enter your answer in millions rounded to 1 decimal place. Estimate the fair market value per share of Torino Marine’s equity at the end of 2021 if the company has 45 million shares outstanding and the market value of its interest-bearing liabilities on the valuation date equals $350 million. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. I have the second question right…
The following is a four-year forecast for Torino Marine. Year 2022 2023 2024 2025 Free cash flow ($ millions) −52 73 90 112 Estimate the fair market value of Torino Marine at the end of 2021. Assume that after 2025, earnings before interest and tax will remain constant at $200 million, depreciation will equal capital expenditures in each year, and working capital will not change. Torino Marine’s weighted-average cost of capital is 10 percent and its tax rate is 30 percent. Note: Do not round intermediate calculations. Enter your answer in millions rounded to 1 decimal place. Estimate the fair market value per share of Torino Marine’s equity at the end of 2021 if the company has 37 million shares outstanding and the market value of its interest-bearing liabilities on the valuation date equals $270 million. Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
The following is a four-year forecast for Torino Marine. Year Free cash flow ($ millions) 2022 -63 a. Fair market value b. Fair market value per share 2023 84 2024 101 a. Estimate the fair market value of Torino Marine at the end of 2021. Assume that after 2025, earnings before interest and tax will remain constant at $200 million, depreciation will equal capital expenditures in each year, and working capital will not change. Torino Marine's weighted-average cost of capital is 9 percent and its tax rate is 20 percent. Note: Do not round intermediate calculations. Enter your answer in millions rounded to 1 decimal place. million 2025 123 b. Estimate the fair market value per share of Torino Marine's equity at the end of 2021 if the company has 48 million shares outstanding and the market value of its interest-bearing liabilities on the valuation date equals $380 million. Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Problem 2 ABM Enterprise would like to evaluate/analyze an investment proposal. Given the following: Investment amount 450,000 (2022) Dividends / Revenue stream - 100,000 for the first year and an interval of 5,000 for the succeeding years Discount rate - 14% a. NPV for the perio 2023 through 2029; b. Total NPV using manual computation; c. Total NPV using the Excel function; and d. IRR rate.
Quantitative Problem 1: Assume today is December 31, 2019. Barrington Industries expects that its 2020 after-tax operating income [EBIT(1 - T)] will be $450 million and its 2020 depreciation expense will be $70 million. Barrington's 2020 gross capital expenditures are expected to be $100 million and the change in its net operating working capital for 2020 will be $30 million. The firm's free cash flow is expected to grow at a constant rate of 6% annually. Assume that its free cash flow occurs at the end of each year. The firm's weighted average cost of capital is 8.9%; the market value of the company's debt is $2.6 billion; and the company has 170 million shares of common stock outstanding. The firm has no preferred stock on its balance sheet and has no plans to use it for future capital budgeting projects. Also, the firm has zero non-operating assets. Using the corporate valuation model, what should be the company's stock price today (December 31, 2019)? Do not round intermediate…
Quantitative Problem 1: Assume today is December 31, 2019. Barrington Industries expects that its 2020 after-tax operating income [EBIT(1 – T)] will be $450 million and its 2020 depreciation expense will be $70 million. Barrington's 2020 gross capital expenditures are expected to be $100 million and the change in its net operating working capital for 2020 will be $25 million. The firm's free cash flow is expected to grow at a constant rate of 5% annually. Assume that its free cash flow occurs at the end of each year. The firm's weighted average cost of capital is 9%; the market value of the company's debt is $2.15 billion; and the company has 180 million shares of common stock outstanding. The firm has no preferred stock on its balance sheet and has no plans to use it for future capital budgeting projects. Also, the firm has zero non-operating assets. Using the corporate valuation model, what should be the company's stock price today (December 31, 2019)? Do not round intermediate…
Quantitative Problem 1: Assume today is December 31, 2019. Barrington Industries expects that its 2020 after-tax operating income [EBIT(1-T)] will be $400 million and its 2020 depreciation expense will be $60 million. Barrington's 2020 gross capital expenditures are expected to be $120 million and the change in its net operating working capital for 2020 will be $25 million. The firm's free cash flow is expected to grow at a constant rate of 5.5% annually. Assume that its free cash flow occurs at the end of each year. The firm's weighted average cost of capital is 8.1%; the market value of the company's debt is $2.85 billion; and the company has 190 million shares of common stock outstanding. The firm has no preferred stock on its balance sheet and has no plans to use it for future capital budgeting projects. Also, the firm has zero non-operating assets. Using the corporate valuation model, what should be the company's stock price today (December 31, 2019)? Do not round intermediate…
Quantitative Problem 1: Assume today is December 31, 2019. Barrington Industries expects that its 2020 after-tax operating income [EBIT(1 – T)] will be $410 million and its 2020 depreciation expense will be $70 million. Barrington's 2020 gross capital expenditures are expected to be $120 million and the change in its net operating working capital for 2020 will be $30 million. The firm's free cash flow is expected to grow at a constant rate of 4.5% annually. Assume that its free cash flow occurs at the end of each year. The firm's weighted average cost of capital is 8.5%; the market value of the company's debt is $2.15 billion; and the company has 190 million shares of common stock outstanding. The firm has no preferred stock on its balance sheet and has no plans to use it for future capital budgeting projects. Also, the firm has zero non-operating assets. Using the corporate valuation model, what should be the company's stock price today (December 31, 2019)? Do not round intermediate…
Problem 2 ABM Enterprise would like to evaluate/analyze an investment proposal.Given the following:Investment amount - 450,000 (2022)Dividends / Revenue stream - 100,000 for the first year and an interval of 5,000 for thesucceeding yearsDiscount rate - 14% a. NPV for the perio 2023 through 2029;b. Total NPV using manual computation;c. Total NPV using the Excel function; andd. IRR rate.
Problem 6. Justine Global Info Tech records the following cash flows at the end of each year for a project. If the firm's discount rate is 11%, what is the PRESENT VALUE of the project? Year Cash Flow 1 P794,633.00 2 P542,149.00 3 P836,200.00 4 P716,080.00 P520,354.00
7. Assume that you have full year forecasted financials for 2019 - 2024 (planning period) and the following financials for after the planning period: • NOPAT (last year of planning period) = 90 • Long term growth rate = 2% • Long term ROCB = 11% • WACC = 8% What is the present value (at December 2018) of the terminal value of this company using the Key Value Driver Formula? Please round your answer to the nearest whole number and provide your answer in USD millions without a dollar sign (e.g. 100 instead of $100).
Assume today is 15 Jan 2020. You t e the following information regarding Salalah Ceramics 31 Dec 2019 31 Dec 2020 31 Dec 2021 31 Dec 2022 Cash Flow from 12000 Operations Cash Investment 7600 Cash flow from operations will grow by 10% every year up to 2022 and cash investment will grow by 20% every year up to 2022. FCF growth after 2022 will be 5% and required return is 12%. Assuming net debt is 7000 1. What is the firm's enterprise value 2. What is the firm's value of equity

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