The consulting company Maggi has been hired to value the company Bolli AS, Bolli expects one operating profit of NOK 400 million in 2023. The company is expected to grow by 2.25% in year, and achieves a 9% return on invested capital. Bolli is 100% equity financed and the cost of equity is 10%. a) What is the investment rate for Bolli? b) What is the value of the company in 2022? c) Maggi believes that growth in the future will be higher than 2.25%, they believe that it is more likely to be 4.5%. What is the value of Bolli in 2022 if this growth is used as a basis. the value calculation?

The consulting company Maggi has been hired to value the company Bolli AS, Bolli expects one operating profit of NOK 400 million in 2023. The company is expected to grow by 2.25% in year, and achieves a 9% return on invested capital. Bolli is 100% equity financed and the cost of equity is 10%. a) What is the investment rate for Bolli? b) What is the value of the company in 2022? c) Maggi believes that growth in the future will be higher than 2.25%, they believe that it is more likely to be 4.5%. What is the value of Bolli in 2022 if this growth is used as a basis. the value calculation?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 5PB: Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated...

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The consulting company Maggi has been hired to value the company Bolli AS. Bolli expects one operating profit of NOK 400 million in 2023. The company is expected to grow by 2.25% in year, and achieves a 9% return on invested capital. Bolli is 100% equity financed and the cost of equity is 10%. a) Maggi believes that growth in the future will be higher than 2.25%, they believe that it is more likely to be 4.5%. What is the value of Bolli in 2022 if this growth is used as a basis. the value calculation? b) Explain the difference in values from questions b) and c)? c) Maggi then believes that an investment rate of 20% should be used for Bolli, and one growth of 3%, what will be the value of Bolli in 2022 based on this investment rate and the growth?
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