Business, 05.05.2021 04:20, schuenkelisa
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 restaurant’s 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%.
Requried:
a. What is the restaurant’s enterprise free cash flow in year 1?
b. What is the restaurant’s enterprise free cash flow in year 2?
c. What is the restaurant’s cost of equity?
Answers: 3
Business, 22.06.2019 06:00, StephanieQueen2003
For 2018, rahal's auto parts estimates bad debt expense at 1% of credit sales. the company reported accounts receivable and an allowance for uncollectible accounts of $86,500 and $2,100, respectively, at december 31, 2017. during 2018, rahal's credit sales and collections were $404,000 and $408,000, respectively, and $2,340 in accounts receivable were written off. rahal's accounts receivable at december 31, 2018, are:
Answers: 2
Business, 22.06.2019 21:10, tonimgreen17p6vqjq
An investor purchases 500 shares of nevada industries common stock for $22.00 per share today. at t = 1 year, this investor receives a $0.42 per share dividend (which is not reinvested) on the 500 shares and purchases an additional 500 shares for $24.75 per share. at t = 2 years, he receives another $0.42 (not reinvested) per share dividend on 1,000 shares and purchases 600 more shares for $31.25 per share. at t = 3 years, he sells 1,000 of the shares for $35.50 per share and the remaining 600 shares at $36.00 per share, but receives no dividends. assuming no commissions or taxes, the money-weighted rate of return received on this investment is closest to:
Answers: 3
Business, 23.06.2019 08:30, gabe7774
1. using only the amounts given, compute net cash provided by operations, both without and with the reclassification of the receivables. which reporting makes moss look better? 2. under what condition would the reclassification of the receivables be ethical? 3. unethical?
Answers: 1
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