Business, 07.10.2019 20:20 lucasrandall

In the year prior to going public, a firm has revenues of $20 million and net income after taxes of $2 million. the firm has no debt, and revenue is expected to grow at 20% annually for the next five years and 5% annually thereafter. net profit margins are expected remain constant throughout. capital expenditures are expected to grow in line with depreciation and working capital requirements are minimal. the average beta of a publicly traded company in this industry is 1.50 and the average debt/equity ratio is 20%. the firm is managed very conservatively and does not intend to borrow through the foreseeable future. the treasury bond rate is 6% and the tax rate is 40%. the normal spread between the return on stocks and the risk free rate of return is believed to be 5.5%. reflecting the slower growth rate in the sixth year and beyond, the discount rate is expected to decline by 3 percentage points. estimate the value of the firm’s equity.

Answers: 2

Show answers

Another question on Business

Business, 22.06.2019 02:30

When interest is compounded continuously, the amount of money increases at a rate proportional to the amount s present at time t, that is, ds/dt = rs, where r is the annual rate of interest. (a) find the amount of money accrued at the end of 3 years when $4000 is deposited in a savings account drawing 5 3 4 % annual interest compounded continuously. (round your answer to the nearest cent.) $ (b) in how many years will the initial sum deposited have doubled? (round your answer to the nearest year.) years (c) use a calculator to compare the amount obtained in part (a) with the amount s = 4000 1 + 1 4 (0.0575) 3(4) that is accrued when interest is compounded quarterly. (round your answer to the nearest cent.) s = $

Answers: 1

Answer

Business, 22.06.2019 12:00

In the united states, one worker can produce 10 tons of steel per day or 20 tons of chemicals per day. in the united kingdom, one worker can produce 5 tons of steel per day or 15 tons of chemicals per day. the united kingdom has a comparative advantage in the production of:

Answers: 2

Answer

Business, 22.06.2019 12:30

Suppose a holiday inn hotel has annual fixed costs applicable to its rooms of $1.2 million for its 300-room hotel, average daily room rents of $50, and average variable costs of $10 for each room rented. it operates 365 days per year. the amount of operating income on rooms, assuming an occupancy* rate of 80% for the year, that will be generated for the entire year is *occupancy = % of rooms rented

Answers: 1

Answer

Business, 22.06.2019 15:00

Why entrepreneurs start businesses. a) monopolistic competition b) perfect competition c) sole proprietorship d) profit motive

Answers: 1

Answer

You know the right answer?

In the year prior to going public, a firm has revenues of $20 million and net income after taxes of...

Questions