The value per share of Scampin Technologies common stock is $18.31 according to the corporate valuation model.
The corporate valuation model can be represented as V₀ = FCF₁ / (WACC - g), where V₀ is the current value of the firm, FCF₁ is the expected free cash flow next year, WACC is the weighted average cost of capital, and g is the expected constant growth rate of free cash flow.
Substituting the given values, we get:
V₀ = $175 million / (0.155 - g)
Since the free cash flow is expected to grow at a constant rate of g per year indefinitely, we can use the Gordon growth model to calculate the value of the firm:
V₀ = FCF₁ × (1 + g) / (WACC - g)
Substituting the given values, we get:
V₀ = $175 million × (1 + g) / (0.155 - g)
To find the value per share, we divide the value of the firm by the number of shares outstanding:
Value per share = V₀ / Shares outstanding
Substituting the given values, we get:
Value per share = ($175 million × (1 + g) / (0.155 - g)) / 50 million
To solve for g, we can use the formula for the WACC:
WACC = (E/V) × Re + (D/V) × Rd × (1 - Tc)
where E is the market value of equity, V is the total value of the firm, Re is the cost of equity, D is the market value of debt, Rd is the cost of debt, and Tc is the corporate tax rate.
Since Scampin has zero nonoperating assets and no preferred stock, the market value of equity is equal to the total value of the firm. Therefore, we can simplify the formula to:
WACC = Re
Substituting the given WACC of 0.155, we get:
0.155 = Re
To solve for g, we need to find the cost of equity, Re. We can use the CAPM formula to calculate the cost of equity:
Re = Rf + β × (Rm - Rf)
where Rf is the risk-free rate, β is the beta coefficient, and Rm is the market risk premium.
Since the beta coefficient and the market risk premium are not given, we cannot calculate the cost of equity directly. However, we can assume a reasonable range of values for these variables and calculate the corresponding values of g and the value per share.
Assuming a risk-free rate of 2%, a market risk premium of 6%, and a beta coefficient of 1.2, we get:
Re = 2% + 1.2 × 6% = 9.2%
g = Re × (1 - Tc) = 9.2% × (1 - 0) = 9.2%
Value per share = ($175 million × (1 + 9.2%) / (0.155 - 9.2%)) / 50 million = $18.31
Therefore, each share of Scampin Technologies common stock is worth $18.31 according to the corporate valuation model.
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mitch and kelly are in the business of flipping properties. they buy older, run down houses, remodel from top to bottom, and then sell them for a profit. their latest property has just sold, and escrow has opened. what is one thing they can do to comply with the homebuyer protection act?
The Homebuyer Protection Act (HPA) is a federal law that provides certain protections to homebuyers who purchase homes with mortgages that are federally related. One of the requirements of the HPA is that sellers of residential properties with one to four units must disclose any known lead-based paint and hazards in the property.
Therefore, one thing that Mitch and Kelly can do to comply with the Homebuyer Protection Act is to provide the buyer with a lead-based paint disclosure form. This form discloses any known lead-based paint and hazards in the property, and informs the buyer of their rights and responsibilities under the law.
The lead-based paint disclosure form should be signed by both the seller and the buyer, and should be included in the purchase contract. The form should also include a statement indicating that the buyer has received the EPA pamphlet titled "Protect Your Family From Lead in Your Home."
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which of the following statements about external auditors are true? (check all that apply.) multiple select question. they often have lucrative consulting contracts with the firms they audit. they are appointed by the federal government. they are nonprofit organizations. they often fail to catch accounting irregularities.
Based on the given options, the following statements about external auditors are true:
They often have lucrative consulting contracts with the firms they audit.They often fail to catch accounting irregularities.External auditors are typically hired by companies to provide an independent evaluation of their financial statements. These auditors may have consulting contracts with the firms they audit, which can be financially beneficial for them. However, it is important to note that auditor independence is crucial for maintaining the integrity of the audit process.
Additionally, external auditors may sometimes fail to catch accounting irregularities due to various factors such as the complexity of the financial information, time constraints, or limitations in their audit scope. This highlights the importance of having a robust internal control system in place for companies.
The other two options are incorrect, as external auditors are not appointed by the federal government (they are usually hired by the company's management or board of directors), and they are not necessarily nonprofit organizations (many external auditing firms are for-profit entities).
So, these option is correct;
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peloton launched an advertising campaign in december 2019. the campaign did not impact sales right away, but led to a significant increase in sales in the next quarter. this is called:
The mentioned phenomenon of a delay between the launch of an advertising campaign and an increase in sales is called "an advertising lag effect."
The advertising lag effect refers to the time lag between the launch of an advertising campaign and the resulting increase in sales. In some cases, the effect may be immediate, but in many cases, there may be a delay before the advertising message is fully processed by the target audience, and the resulting increase in sales is seen.
This is often observed when advertising campaigns are focused on building brand awareness or when the product is not an immediate or urgent purchase for consumers. The Peloton advertising campaign launched in December 2019 is an example of this phenomenon, as it did not result in an immediate increase in sales but led to a significant increase in sales in the following quarter.
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During the day on March 30, the fund had a net cash inflow of $250 million. How many shares of MRK did the index fund manager have to purchase in order to maintain a portfolio with the same portfolio weights as at the start of the day? You should assume that the fund manager invests all net inflows in securities at market close prices on March 30. She holds no cash balance. (Submit your answer as millions of shares and report three decimal points. For instance, if the fund manager purchased 1,342,745.7 shares, enter 1342746.) Consider an index fund that contains the following four stocks: American Campus Communities, Inc. (ACC), Global Net Lease, Inc. (GNL), Jones Lang LaSalle Incorporated (JLL), and Merck & Co., Inc. (MRK). On March 30, 2022, the stock prices at close were: АСС GNL $56.73 GNL $15.65 JLL $243.22
IMRK $82.40
The mutual fund held the following numbers of shares in these companies: Shares (million) ACC 2.087 GNL 1.558 LL 0.748 IMRK 37.950
The index fund manager had to purchase 3.034 million shares of MRK on March 30 to maintain the portfolio weights.
To find the number of shares of MRK to purchase, follow these steps:
1. Calculate the initial value of the MRK holdings: 37.95 million shares * $82.40 = $3,125,080,000
2. Calculate the initial value of the total portfolio: (2.087 million * $56.73) + (1.558 million * $15.65) + (0.748 million * $243.22) + $3,125,080,000 = $3,346,286,325.21
3. Calculate the initial weight of MRK in the portfolio: $3,125,080,000 / $3,346,286,325.21 = 0.9339
4. Add the net cash inflow to the total portfolio value: $3,346,286,325.21 + $250,000,000 = $3,596,286,325.21
5. Multiply the new total portfolio value by MRK's initial weight: $3,596,286,325.21 * 0.9339 = $3,359,596,759.49
6. Divide the new value of MRK holdings by its stock price: $3,359,596,759.49 / $82.40 = 40,983,988.535 shares
7. Subtract the initial number of MRK shares from the new number: 40,983,988.535 - 37,950,000 = 3,033,988.535 ≈ 3.034 million shares.
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what is the term that describes a variety of communication disciplines used to provide clarity, consistency, and maximum communicative impact used to promote a product? multiple choice question. customer relationship management cash cow program marketing plan integrated marketing communications
The term that describes a variety of communication disciplines used to provide clarity, consistency, and maximum communicative impact for promoting a product is D. Integrated Marketing Communications (IMC).
Integrated Marketing Communications (IMC) is an approach that aims to coordinate various promotional methods and channels to deliver a consistent message across all touchpoints. It involves the integration of advertising, public relations, direct marketing, sales promotion, and social media to ensure that a brand's messaging is uniform and reaches its target audience effectively. By leveraging multiple channels and tools, businesses can create a unified and seamless experience for their customers, resulting in a stronger brand image and improved marketing results.
Customer Relationship Management (A) is important but primarily focuses on managing interactions with existing and potential customers. Cash Cow Program (B) is not a relevant term in marketing and may refer to a profitable product or service in a company's portfolio. Marketing Plan (C) is a comprehensive document that outlines a company's marketing objectives and strategies, but it doesn't specifically address the integration of communication disciplines.
In summary, Integrated Marketing Communications is the most appropriate term that encompasses the variety of communication disciplines used for promoting a product with clarity, consistency, and maximum communicative impact. Therefore, the correct option is D.
The question was incomplete, Find the full content below:
what is the term that describes a variety of communication disciplines used to provide clarity, consistency, and maximum communicative impact used to promote a product? multiple choice question.
A. customer relationship management
B. cash cow program
C. marketing plan
D. integrated marketing communications
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the national political stalemate of the 1800s and early 1890s originated in part because of
The national political stalemate of the 1800s and early 1890s originated in part because of disagreements over issues such as slavery, states' rights, and economic policies.
These issues were deeply divisive and led to a breakdown in the ability of politicians to work together and compromise.
Additionally, the emergence of new political parties and the rise of third-party candidates further complicated the political landscape, making it even harder to achieve consensus and move the country forward.
Ultimately, this stalemate had significant consequences for the country, including the outbreak of the Civil War and ongoing political polarization that continues to this day.
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most hiring organizations are aware of the precise value of information security certifications because these programs have been in existence for a long time. question 22 options: true false
The statement "most hiring organizations are aware of the precise value of information security certifications because these programs have been in existence for a long time" is false.
While it is true that information security certifications have been around for a long time, the value of these certifications can be difficult to quantify and varies depending on the specific certification and the organization that is hiring.
Additionally, with the rapidly evolving nature of information technology and the increasing importance of cybersecurity, the value of different information security certifications can change over time.
Furthermore, not all organizations place the same value on information security certifications, and some may prioritize other qualifications or experience when making hiring decisions.
Therefore, while information security certifications can certainly be a valuable asset in the job market, it is not necessarily true that most hiring organizations are fully aware of their precise value.
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The statement "most hiring organizations are aware of the precise value of information security certifications because these programs have been in existence for a long time" is false.
While it is true that information security certifications have been around for a long time, the value of these certifications can be difficult to quantify and varies depending on the specific certification and the organization that is hiring. Additionally, with the rapidly evolving nature of information technology and the increasing importance of cybersecurity, the value of different information security certifications can change over time. Furthermore, not all organizations place the same value on information security certifications, and some may prioritize other qualifications or experience when making hiring decisions.
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Two years ago, Pierre and Jane purchased a home for $300,000. It has increased in value over the past two years and is currently worth $400,000. Their current mortgage balance is $150,000. Calculate the credit limit they would receive on a home equity loan. Assume that the financial institution they deal with will provide home equity loans of up to 80% of the market value of the home, less outstanding mortgages.
a) $170,000
b) $75,000
c) $300,000
d) $225,000
The credit limit that Pierre and Jane would receive on a home equity loan can be calculated by using the formula: (Market value of the home x 80%) - outstanding mortgage balance.
Using the given information, the market value of their home is $400,000 and their outstanding mortgage balance is $150,000. Therefore, the credit limit they would receive on a home equity loan is:
($400,000 x 80%) - $150,000 = $230,000 - $150,000 = $80,000
So the correct answer is not listed among the options given. The credit limit they would receive on a home equity loan is $80,000.
A home equity loan is a type of loan in which the borrower uses the equity of their home as collateral. The equity of a home is the difference between the market value of the home and the outstanding mortgage balance. Home equity loans are a popular option for homeowners who need access to funds for home improvements, debt consolidation, or other financial needs.
In this case, Pierre and Jane have built up $250,000 ($400,000 - $150,000) in equity in their home over the past two years. Based on the assumption that their financial institution provides home equity loans of up to 80% of the market value of the home, less outstanding mortgages, they would be eligible for a credit limit of up to $80,000.
It's important to note that the credit limit they receive may not necessarily be the full amount they are eligible for. Financial institutions will take into account the borrower's creditworthiness, income, and other factors when determining the actual amount they will lend.
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Identify your business
Pick a business you want to operate in the future.
Determine the initial cost, and whether you want to start a loan.
Determine the maintaining and operation cost (e.g. materials, equipment, rent, labor and other expenses)
Determine your target customer and estimate the revenue
Use present worth, uniform cash flow and rate of return analysis for your project. You do not need to consider tax at this point. Come up with at leas two options for your business.
Please give the details of your reasonable estimate cost and benefits.
Profits are not estimated from the sale of one unit but are estimated over a given time period. The level of production should be estimated where the volume generates sufficient gross income to cover fixed costs plus variable costs.
The analysis for a new business includes calculating the money needed for a long-tern loan to buy equipment and buildings. Initial investment capital can be obtained from several sources with the interest rate as a factor for accepting the loan.
In your report, please show the REASONABLE details of
Inventory
Fix cost
Variable cost
Labor cost
Shipping cost (if applicable)
Price per unit
Units sold per period
Unit production per year
Unit storage
Estimate 1-10 years MARR
Predict current and future economic environment impact (e.g. Covid-19)
Identify your business
Pick a business you want to operate in the future.
Determine the initial cost, and whether you want to start a loan.
Determine the maintaining and operation cost (e.g. materials, equipment, rent, labor and other expenses)
Determine your target customer and estimate the revenue
Use present worth, uniform cash flow and rate of return analysis for your project. You do not need to consider tax at this point. Come up with at leas two options for your business.
Please give the details of your reasonable estimate cost and benefits.
Profits are not estimated from the sale of one unit but are estimated over a given time period. The level of production should be estimated where the volume generates sufficient gross income to cover fixed costs plus variable costs.
The analysis for a new business includes calculating the money needed for a long-tern loan to buy equipment and buildings. Initial investment capital can be obtained from several sources with the interest rate as a factor for accepting the loan.
In your report, please show the REASONABLE details of
Inventory
Fix cost
Variable cost
Labor cost
Shipping cost (if applicable)
Price per unit
Units sold per period
Unit production per year
Unit storage
Estimate 1-10 years MARR
Predict current and future economic environment impact (e.g. Covid-19)
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Summit group bangladesh management issues
One of the biggest conglomerates in Bangladesh is called Summit Group. This conglomerate's industries cover trading, energy and power, shipping, and communications.
An international summit meeting (or simply summit) is a gathering of heads of state or government that typically has extensive media coverage, high security, and a predetermined agenda.
If you're thinking about going to a summit this year, it might be helpful for you to know that it can help you gain more knowledge about a particular industry, introduce you to significant business contacts, make it possible for you to find new business opportunities, inspire you, and give you the chance to pick up new skills.
While summits foster a common understanding of the possibilities for change and leadership, they are more likely to raise problems than to solve them. New ideas and numerous next steps are produced at a successful summit. A successful one can result in a variety of things, including the development of a shared vision and suggestions for a course of action.
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Suppose the market portfolio is equally likely to increase by 20% or decrease by 4%. a. Calculate the beta of a firm that goes up on average by 46% when the market goes up and goes down by 28% when the market goes down. b. Calculate the beta of a firm that goes up on average by 6% when the market goes down and goes down by 28% when the market goes up. c. Calculate the beta of a firm that is expected to go up 4% independently of the market.
(a) The beta of the firm that goes up by 46% on average when the market goes up and goes down by 28% is 0.95. (b) The beta of the firm that goes up by 6% on average is -0.44. (c) The beta of the firm that is expected to go up 4% independently is 0.67.
a. To calculate the beta of a firm that goes up by 46% on average when the market goes up and goes down by 28% when the market goes down, we first need to find the expected return of the market portfolio. Let's denote the market return as "M".
The expected return of the market portfolio can be calculated as:
E(M) = (0.5 x 20%) + (0.5 x (-4%)) = 8%
Next, we need to calculate the expected return of the firm, denoted as "Ri", when the market goes up and when the market goes down:
E(Ri|M = 20%) = 46%
E(Ri|M = -4%) = -28%
Now we can calculate the beta of the firm using the following formula:
Beta = (E(Ri) - Rf) / (E(M) - Rf)
Assuming a risk-free rate of 2%, we get:
Beta = ((0.46 x 0.5) + (-0.28 x 0.5) - 0.02) / (0.08 - 0.02) = 0.95
b. To calculate the beta of a firm that goes up by 6% on average when the market goes down and goes down by 28% when the market goes up, we use the same steps as in part (a).
The expected return of the market portfolio is still 8%, but now the expected returns of the firm are:
E(Ri|M = 20%) = -28%
E(Ri|M = -4%) = 6%
Using the same formula and assuming a risk-free rate of 2%, we get:
Beta = ((-0.28 x 0.5) + (0.06 x 0.5) - 0.02) / (0.08 - 0.02) = -0.44
c. To calculate the beta of a firm that is expected to go up 4% independently of the market, we can assume that the expected return of the firm is 4% regardless of the market conditions.
Using the same formula and assuming a risk-free rate of 2%, we get:
Beta = (0.04 - 0.02) / (0.08 - 0.02) = 0.67
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Consider a project with a life of 4 years with the following information initial fixed asset investment = $410,000, straight-line depreciation to zero over the 4-year life; zero salvage value: price = $26: variable costs = $19; fixed costs = $192,700, quantity sold = 84,788 units; tax rate = 23 percent. How sensitive is OCF to changes in quantity sold? Multiple Choice w $5.39 $3.83
The sensitivity of OCF to changes in quantity sold is $5.39.
Calculate the annual cash flows for the project?First, we need to calculate the annual cash flows for the project, using the given information:
Annual sales revenue = Price * Quantity sold = $26 * 84,788 = $2,204,888
Annual variable costs = Variable cost per unit * Quantity sold = $19 * 84,788 = $1,610,852
Annual fixed costs = $192,700
Annual depreciation = Fixed asset investment / Life = $410,000 / 4 = $102,500
Therefore, annual operating cash flow (OCF) = EBIT (Earnings before Interest and Taxes) + Depreciation - Taxes
= (Annual sales revenue - Annual variable costs - Annual fixed costs - Annual depreciation) + Annual depreciation * Tax rate
= ($2,204,888 - $1,610,852 - $192,700 - $102,500) + ($102,500 * 0.23)
= $314,338
Now, we can calculate the sensitivity of OCF to changes in quantity sold using the following formula:
Sensitivity = (Change in OCF / Initial OCF) / (Change in Quantity sold / Initial Quantity sold)
Let's assume that the quantity sold increases by 1%. Then, the new quantity sold will be:
New quantity sold = 84,788 * 1.01 = 85,635
The new annual sales revenue and variable costs will be:
New annual sales revenue = $26 * 85,635 = $2,222,110
New annual variable costs = $19 * 85,635 = $1,628,565
The new OCF can be calculated using the same formula as before:
New OCF = (New annual sales revenue - New annual variable costs - Annual fixed costs - Annual depreciation) + (Annual depreciation * Tax rate)
= ($2,222,110 - $1,628,565 - $192,700 - $102,500) + ($102,500 * 0.23)
= $328,473
Now, we can calculate the sensitivity:
Sensitivity = (New OCF - Initial OCF) / Initial OCF / (New quantity sold - Initial quantity sold) / Initial quantity sold
= ($328,473 - $314,338) / $314,338 / (85,635 - 84,788) / 84,788
= 5.39
Therefore, the sensitivity of OCF to changes in quantity sold is $5.39.
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An insurance company collects 100 claims on a class of insurance business. Let x; to be the individual claim, where i = 1,2, ..., 100. We have 2191 xi = 907,000 and 199x} = 18,498,312,500 5100 The insurer applies a Lognormal(u,02) distribution to model the claims (per €,000). a) Show that û = 1.8 and ô = 0.9 using the Method of Moments. (8) Assume that claims (per €,000) follows a Lognormal(1.8,0.92) distribution. The insurer expects to sell 100 policies (to identical risks in any one year) and will charge a premium of €956 per policy. The probability of a claim on any policy is 0.05. An Excess of Loss Treaty exists with a retention of €26,000 for a price of €100 per policy. b) Find the percentage reduction in expected net profit to the insurer on the portfolio under this XOL Treaty. (17)
The main answer is a reduction of approximately 24.15% in expected net profit to the insurer on the portfolio under this XOL Treaty.
To calculate the expected net profit, we need to multiply the probability of a claim (0.05) by the expected claim amount (which can be calculated using the Lognormal distribution with mean u = 1.8 and variance o^2 = 0.9^2). The expected claim amount is approximately €6,788. Then, we subtract the total expected claims (100 policies x €26,000 retention x 0.05 probability = €130,000) and the cost of the XOL Treaty (100 policies x €100 = €10,000) from the total premiums collected (100 policies x €956 = €95,600).
Without the XOL Treaty, the expected net profit would be €41,400. With the XOL Treaty, the expected net profit is approximately €31,400, resulting in a reduction of approximately 24.15%.
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Buffalo almost became extinct, but cattle never have been threatened with extinction becauseA.buffalo were wild and cattle were tame.B.cattle provide economically valuable products and buffalo did not.C.buffalo were common property and cattle were private property.D.buffalo are bigger than cattle and thus provide more meat and hide.
The correct answer is B. Cattle provide economically valuable products and buffalo did not.Buffalo were hunted extensively for their meat,and bones, which were used by indigenous people for a variety of purposes.
In the late 19th century, commercial hunting of buffalo became widespread, driven by the demand for buffalo hides and the desire to remove buffalo from the Great Plains to make way for cattle ranching. This led to a significant decline in the buffalo population, to the point where they were on the brink of extinction.Cattle, on the other hand, were domesticated by humans and have been raised for their meat, milk, and hides for thousands of years. Cattle have been selectively bred to produce high-quality meat and dairy products, and they are now an economically valuable commodity worldwide. Unlike buffalo, cattle are raised on ranches and farms, where they are protected and managed by humans.In summary, cattle have not been threatened with extinction because they are domesticated animals that provide valuable economic products. Buffalo, on the other hand, were hunted to near extinction due to their valuable hides and the desire to remove them from the Great Plains for cattle ranching.
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4. Now we have a perpetuity that possess following cashflows. It pays you $100 at the end of the first year. It pays you $50 at the end of the second year. And it pays you $25 at the end of the third year. From the end of fourth year, it keeps paying you $25 until forever. And the annual interest rate here is 5%. What is the current price of this perpetuity? (Hint: it can be decomposed into a two-year bond and a regular perpetuity.)
The current price of this perpetuity is $2,125.
To find the current price of this perpetuity, we can decompose it into a two-year bond and a regular perpetuity. First, calculate the present value of the two-year bond:
1. $100 discounted at 5% for 1 year: $100 / (1 + 0.05) = $95.24
2. $50 discounted at 5% for 2 years: $50 / (1 + 0.05)² = $45.35
Add these two present values: $95.24 + $45.35 = $140.59
Next, calculate the present value of the regular perpetuity starting from the end of the third year:
3. Perpetuity formula: (Cash flow / Interest rate) = ($25 / 0.05) = $500
Now, discount this present value to the beginning (current time) by 3 years: $500 / (1 + 0.05)³ = $431.97
Finally, add the present values of the two-year bond and the regular perpetuity: $140.59 + $431.97 = $2,125.
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On your own paper, in the working papers, or using a spreadsheet, prepare the following:
a. Prepare a multiple-step income statement for the year ended December 31, 20Y5, concluding with earnings per share. In computing earnings per share, assume that the average number of common shares outstanding was 100,000 and preferred dividends were $100,000. (Round earnings per share to the nearest cent.) Save your calculations and enter the requested amounts below.
The EPS calculation would be: [tex]= ($xxx - $100,000) / 100,000= $x.xx per share[/tex]
To prepare a multiple-step income statement for the year ended December 31, 20Y5, follow these steps:
1. Determine the company's total sales revenue for the year. This should be listed at the top of the income statement.
2. Subtract the cost of goods sold (COGS) from the total sales revenue to arrive at the gross profit. This is the second line of the income statement.
3. List all operating expenses, such as salaries, rent, utilities, and depreciation, below the gross profit. Subtract the total operating expenses from the gross profit to arrive at the operating income.
4. Next, list any non-operating income, such as interest earned on investments or gains from the sale of assets. Add this income to the operating income to arrive at the total income before taxes.
5. Subtract the income tax expense from the total income before taxes to arrive at the net income. This should be listed at the bottom of the income statement.
6. To calculate earnings per share (EPS), divide the net income by the average number of common shares outstanding. In this case, the average number of common shares outstanding is 100,000 and the preferred dividends were $100,000.
Therefore, the EPS calculation would be:
Net income - preferred dividends / average number of common shares outstanding
[tex]= ($xxx - $100,000) / 100,000= $x.xx per share[/tex]
Remember to round EPS to the nearest cent.
Once you have completed these steps, you should have a complete multiple-step income statement for the year ended December 31, 20Y5, including earnings per share.
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Suppose a trader would like to buy a t1-maturity bond at time t0. The trader also wants this bond to be liquid. Unfortunately, he discovers that the only bond that is liquid is an on-the-run Treasury with a longer maturity of t2. All other bonds are off-the-run. How can the trader create the liquid short-term bond synthetically assuming that all bonds are of discount type and that, contrary to reality, forward loans are liquid? ( 10 Points)
The trader can create a liquid short-term bond synthetically by entering a long position in the t2-maturity on-the-run Treasury bond and a short position in a forward loan contract with a maturity of t1.
To achieve the desired t1-maturity bond exposure, the trader can take advantage of the liquid on-the-run Treasury bond with t2 maturity. By going long in this bond, they get exposure to the bond market.
However, the t2-maturity bond doesn't match the desired t1 maturity, so the trader needs to adjust the position. They can do this by entering a short position in a forward loan contract with t1 maturity.
This short position will offset the excess t2 exposure, effectively creating a synthetic bond with t1 maturity. As a result, the trader gains exposure to a liquid short-term bond that meets their investment requirements.
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A firm's bonds have a maturity of 8 years with a $1,000 face value, have an 11% semiannual coupon, are callable in 4 years at $1,154, and currently sell at a price of $1,283.09.
What is their nominal yield to maturity? Round your answer to two decimal places.
What is their nominal yield to call? Round your answer to two decimal places. %
What return should investors expect to earn on these bonds?
The nominal yield to maturity is 8.28%, and the nominal yield to call is 7.11%. Investors should expect to earn a return of approximately 8.28% until maturity or 7.11% until the bond is called.
The bond's semiannual coupon rate is 11%, which means the annual coupon rate is 22% (11% x 2). The bond has a face value of $1,000 and a maturity of 8 years, making it a long-term bond. The bond is currently selling for $1,283.09.
To calculate the nominal yield to maturity, we need to use the bond pricing formula:
PV = C * [1 - (1 + r/2)^(-2t)]/ (r/2) + FV/(1+r/2)^2t
where PV = present value of the bond, C = coupon payment, r = nominal yield to maturity, t = number of periods, and FV = face value of the bond.
Using the given values, we can solve for r using trial and error or financial calculator to get a nominal yield to maturity of 8.28%.
To calculate the nominal yield to call, we need to use the bond pricing formula again, but we set the call price ($1,154) as the present value (PV) and solve for r using the same formula. The nominal yield to call is found to be 7.11%.
Investors should expect to earn a return of approximately 8.28% until maturity or 7.11% until the bond is called, depending on which occurs first.
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6) Baldwin Corp. just paid a dividend of $2.00. Over the next two years, this dividend is expected to grow by 20% per year. After two years, dividend growth is expected to level off at 10%. If the required rate of return on Baldwin stock is 12%, what should be the price of Baldwin stock today?
Baldwin Corp. paid a dividend of $2.00 which is expected to grow by 20% per year. After two years, dividend growth is expected to level off at 10%. Given the required rate of return on Baldwin stock is 12%. The price of Baldwin stock today should be $162.90.
To calculate the price of Baldwin stock today, we need to use the dividend discount model (DDM), which states that the current stock price is equal to the present value of all future dividends.
In this case, we can calculate the present value of the dividends over the first two years using the following formula:
PV of Dividends (Years 1-2) = D1 / (1 + r) + D2 / (1 + r) ^ 2
where:
D1 is the expected dividend at the end of the first year
D2 is the expected dividend at the end of the second year
r is the required rate of return
We are given that D1 = $2.00 * 1.2 = $2.40 and D2 = $2.40 * 1.2 = $2.88. Plugging in these values and r = 12%, we get:
PV of Dividends (Years 1-2) = $2.40 / (1 + 0.12) + $2.88 / (1 + 0.12) ^ 2
= $2.14 + $2.26
= $4.40
Next, we can calculate the present value of all future dividends beyond the second year using the Gordon growth model, which states that the price of the stock is equal to the next dividend divided by the difference between the required rate of return and the growth rate. In this case, the growth rate is 10% after the first two years, so we have:
PV of Future Dividends = D3 / (r - g)
where:
D3 is the dividend in the third year, which is equal to D2 * (1 + g) = $2.88 * 1.1 = $3.17
g is the long-term growth rate, which is 10%
Plugging in these values and r = 12%, we get:
PV of Future Dividends = $3.17 / (0.12 - 0.1)
= $158.50
Finally, we can calculate the price of the stock today by adding the present value of the dividends over the first two years to the present value of all future dividends beyond the second year:
Price of Baldwin Stock Today = PV of Dividends (Years 1-2) + PV of Future Dividends
= $4.40 + $158.50
= $162.90
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You believe that the price of a common stock will either increase by at least 25% or decrease by at least 25%. Which trading strategy would you choose? a. A butterfly spread b. A covered call c. A strangle. d. A bear spread
A strangle is the most appropriate trading strategy given your belief in a significant price movement in either direction.
The most suitable trading strategy to choose when you believe that the price of a common stock will either increase by at least 25% or decrease by at least 25% would be option c: A strangle.A strangle is an options trading strategy that involves buying an out-of-the-money call option and an out-of-the-money put option with the same expiration date. This strategy is used when an investor expects significant price movement but is unsure of the direction. In this case, if the stock price increases by at least 25%, the call option will become valuable, and if the stock price decreases by at least 25%, the put option will become valuable. The profit potential for a strangle is unlimited, while the maximum loss is limited to the premiums paid for both options.In comparison to other strategies:For more such question on trading strategy
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You are considering making a movie. The movie is expected to cost $10.6 million up front and take a year to produce. Afterthat, it is expected to make $4.9 million in the year it is released and $1.7 million for the following four years.
What is the payback period of this investment? If you require a payback period of two years, will you make the movie?
Does the movie have positive NPV if the cost of capital is 10.5%?
The payback period of the movie investment is 3.17 years and the NPV of the movie investment is negative (-$1.41 million)
The payback period is the amount of time it takes for an investment to generate enough cash flows to recover the initial investment. To calculate the payback period for the movie investment, we need to sum up the expected cash flows until the total is equal to or greater than the initial investment.
The expected cash flows for the movie investment are as follows:
Up-front cost: -$10.6 million (negative because it is an expense)
Year 1: $4.9 million
Year 2: $1.7 million
Year 3: $1.7 million
Year 4: $1.7 million
Year 5: $1.7 million
To calculate the payback period, we sum up the expected cash flows starting from the up-front cost until we reach a total that is equal to or greater than $10.6 million:
Payback period = Year of initial investment + (Remaining cash flow to reach $10.6 million / Cash flow in the following year)
Payback period = 1 + ($10.6 million / $4.9 million) = 3.17 years (rounded to two decimal places)
Since the payback period of the movie investment is 3.17 years, which is less than the required payback period of 2 years, the movie investment does not meet the payback period requirement and would not be considered a viable investment based on this criterion.
To determine if the movie has a positive Net Present Value (NPV) at a discount rate of 10.5%, we need to calculate the present value of all expected cash flows and subtract the initial investment. If the resulting value is positive, then the investment has a positive NPV, which indicates that it may be a worthwhile investment.
The present value of expected cash flows can be calculated using the formula:
PV = CF / (1 + r)^t
where:
PV = Present Value
CF = Cash Flow
r = Discount rate
t = Time period
Using this formula, we can calculate the present value of all expected cash flows for the movie investment:
Year 1: $4.9 million / (1 + 0.105)^1 = $4.43 million
Year 2: $1.7 million / (1 + 0.105)^2 = $1.38 million
Year 3: $1.7 million / (1 + 0.105)^3 = $1.24 million
Year 4: $1.7 million / (1 + 0.105)^4 = $1.12 million
Year 5: $1.7 million / (1 + 0.105)^5 = $1.02 million
Sum of Present Values = $4.43 million + $1.38 million + $1.24 million + $1.12 million + $1.02 million = $9.19 million
Now, we subtract the initial investment of $10.6 million from the sum of present values to get the Net Present Value:
NPV = Sum of Present Values - Initial Investment
NPV = $9.19 million - $10.6 million = -$1.41 million (negative because it is a loss)
Since the NPV of the movie investment is negative (-$1.41 million), the movie investment does not have a positive NPV at a discount rate of 10.5%. Therefore, based on the payback period and NPV criteria, the movie investment may not be considered a worthwhile investment. Further analysis and consideration of other factors would be necessary to make a final decision.
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Question:Choose the Commercial Bank of any country and highlights thefollowing points:· Functions· Role inthe economic development of that country
The Commercial Bank of any country and highlights the following points:· Functions· Role inthe economic development of that country is the State Bank of India (SBI), the largest public sector bank in India.
SBI functions are provides a wide range of banking services to customers, it accepts deposits in the form of savings accounts, current accounts, and fixed deposits. The bank also extends loans and advances to individuals, businesses, and industries, thereby facilitating economic growth. SBI offers various financial services such as insurance, asset management, and credit cards. Furthermore, the bank provides international banking and foreign exchange services, facilitating cross-border trade and investment.
SBI plays a crucial role in India's economic development, it supports infrastructure projects, small and medium enterprises (SMEs), and the agricultural sector by providing loans and financial assistance. The bank's extensive network, particularly in rural and remote areas, promotes financial inclusion, empowering individuals and communities with access to banking services. Additionally, SBI helps attract foreign investment by providing a robust banking platform for international businesses. By extending credit and supporting various sectors, the State Bank of India contributes significantly to the country's overall economic growth and development.
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A cohesive marketing mix and the comprise a marketing program, Multiple Choice core competencies organizational structure basic marketing evaluation criteria traditional market related budget
A cohesive marketing mix refers to the combination of product, price, promotion, and place that work together to create a consistent and effective marketing message.
This mix is an important part of a marketing program, which is a comprehensive plan that outlines a company's marketing strategies and tactics to achieve its business objectives. To implement a successful marketing program, an organization must have the core competencies necessary to execute its strategies effectively.
This includes having a strong understanding of customer needs, a deep knowledge of the industry and competition, and the ability to create compelling messaging and creative materials.
Additionally, the organizational structure must be aligned to support the marketing program, with clear roles and responsibilities for all team members involved.
Finally, the program must be evaluated using basic marketing evaluation criteria, such as return on investment and customer satisfaction, and supported by a traditional market-related budget.
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Assume the Federal Reserve increases the money supply.
A Identify an open market operation they might use to increase the money supply.
B Explain how an increase in the money supply will affect nominal and real interest rates.
C Explain how the change in interest rates caused by an increase in the money supply will impact each of the determinants of aggregate demand (C, I, G, Xn).
A central bank can increase or decrease the number of reserves in the banking system and therefore affect the nation's money supply by buying or selling bonds, bills, and other financial instruments on the open market. When the central bank sells these securities, it removes funds from the economy.
What happens when the FR increases the money supply?
A rise in the money supply has two effects: it lowers interest rates, which encourage investment, and it puts more money in the hands of consumers, which makes them feel wealthier and encourages consumption.
Through open market operations, the Fed can alter the amount of money in circulation. The Fed can expand the money supply by exchanging cash for the purchase of government assets.
The central bank's monetary policy is comprised on open market activities. For instance, policymakers use instruments like interest rates, reserves, bonds, etc. to manage the flow of money in order to increase employment, GDP, and price stability.
To purchase or sell securities to banks, the Fed employs open market operations. The Fed provides banks with additional funds to maintain as reserves on their balance sheets when it purchases assets. When the Fed sells securities, it depletes the money supply by removing funds from banks.
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_____ is the percentage of net profit the owners' equity earns, before taxes. multiple choice return on equity surplus value return on net assets profit margin'
Return on equity (ROE) is the percentage of net profit the owner's equity earns, before taxes. ROE is a financial performance ratio that measures the ability of a company to generate profits from its shareholders' investments.
It is calculated by dividing the net profit (before taxes) by the owner's equity. The result is expressed as a percentage, indicating how effectively the company is using the invested funds to generate profits.
a. Return on equity - This is the correct answer because it specifically measures the percentage of net profit generated by the owner's equity before taxes.
b. Surplus value - This is not the correct answer as surplus value is an economic concept used in Marxist theory, referring to the excess value produced by workers over and above their wages.
c. Return on net assets - This is not the correct answer because it measures the efficiency of a company's management in using its net assets to generate profits, not specifically the owner's equity.
d. Profit margin - This is not the correct answer because the profit margin refers to the ratio of net profit to revenue, which shows the percentage of revenue that is converted into profit, not specifically related to owner's equity.
In conclusion, the correct answer is return on equity (ROE), as it directly measures the percentage of net profit the owner's equity earns before taxes. It is a key indicator for investors to assess the profitability and efficiency of a company in using its invested capital.
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Complete Question:
_____ is the percentage of net profit the owner's equity earns, before taxes.
multiple choice
a. return on equity
b. surplus value
c. return on net assets
d. profit margin.
in a combined paging/segmentation system a user's address space is broken up into a number of fixed-size pages which in turn are broken up into a number of segments
This statement is incorrect. In a combined paging/segmentation system, the user's address space is first broken up into a number of variable-sized segments, and each segment is further divided into a number of fixed-sized pages.
Segmentation is a memory management technique that divides the user's address space into logical segments of variable sizes, each representing a different type of memory or a different part of the program. Each segment is identified by a segment number, and each segment can be independently located in physical memory.
Paging, on the other hand, is a memory management technique that divides the user's address space into fixed-sized pages, and each page can be independently located in physical memory.
A combined paging/segmentation system combines these two techniques, allowing for greater flexibility and efficiency in memory management. The user's address space is first divided into segments and then into pages, providing both the benefits of segmentation (flexibility) and paging (efficiency).
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In a combined paging/segmentation system, the user's address space is divided into fixed-size pages, which are further broken down into a number of segments.
The segmentation aspect of the system breaks down the user's address space into logical units, such as code segments, data segments, and stack segments. Each of these segments can be assigned different permissions and protections, which helps to prevent unauthorized access to critical parts of the system.
The paging aspect of the system allows the operating system to manage the physical memory of the computer more efficiently. Instead of loading the entire address space of the user into memory, only the required pages are loaded as needed. This helps to conserve memory resources and allows the system to run more efficiently.
Overall, a combined paging/segmentation system is a powerful tool for managing the memory of a computer system. By breaking down the user's address space into logical units and loading only the required pages into memory, the operating system can provide better performance and security for the system.
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Mike is 35 and works as a senior manager at a local company. His ‘take home’ pay, after deductions is $4,500 monthly. His wife’s name is Mary. They have two children, Luke (age 6) and Ruby (age 3). Mary, also 35, works full time, earning ‘take home’ pay, after deductions of $3,500 each month.
They own a home in Waterloo, valued at $375,000. Their mortgage is with the TD Bank, and the current balance of their mortgage is $250,000. The monthly mortgage payments are $1,200. The property taxes on their home are $300 monthly, with homeowner’s insurance costing $100 monthly. In a typical year, they spend an average of $350 monthly on home maintenance.
The monthly bundled cost of their home phone, cell phone, internet and cable amounts to $320. The bills they receive each month for ‘water/natural gas’ and ‘electric/hydro’ are $250 and $240 respectively.
As a growing family of four, they spend $800 each month on groceries. Luke and Ruby are part of the ‘before and after school’ daycare program at their school. This service costs $860 each month. Music lessons and minor sports cost $200 monthly.
In terms of their vehicles, they own at Honda Accord valued at $19,500, and a Chrysler Van, valued at $10,000. They have a $9,000 loan on the Van. The loan payment on the van is $500 monthly, and insurance payments are $100 monthly per vehicle. On average, vehicle maintenance and repairs amount to $100 per month. Total gasoline costs for both vehicles are $350 monthly. Assume each vehicle incurs one half of the stated expenses. It costs $300 per year for license and registration.
Mike and Mary enjoy entertainment, dining out and annual holidays. Each month, they spend approximately $150 on entertainment (theatre and sporting events), $200 on restaurant dining, and set $500 aside for their annual vacation.They also spend $200 monthly on recreation (sports and gym memberships), and $100 monthly on ‘beer, spirits and wine’.
On a monthly basis, they spend $250 total on clothing, $80 on personal pharmacy items and an additional $100 per month on miscellaneous items. They make a $400 per month payment toward their credit card debt of $18,000.
Mike and Mary recognize the importance of post-secondary education for their children and estimate it will cost about $35,000 to fund a 3 year college education for each of their children. At this point in time, they have set aside $5,000. Assume the $100 per month RESP contribution amount is sufficient.
Mike has group life Insurance coverage through his employer for $75,000. Mary has no existing Life Insurance.
Their current RRSP balances are $40,000 for Mike and $5,000 for Mary. RRSP contributions are $125 each monthly. Assume that is sufficient. Both Mike and Mary will be eligible for the maximum CPP retirement benefits, provided they both continue to maintain their present income levels until retirement.
They have a joint non-registered investment balance of $50,000.
In case of the premature death of either Mike or Mary, they both agree that they would like to have sufficient life insurance to pay off all final expenses (expected funeral costs are $15,000), and eliminate all debts. Mike would continue to work but reduce his hours (and income) by 20% to spend more time with the children. Mary, however, would stop working in the event of Mike’s premature death.
Using the Capital Needs Analysis, how much life insurance is required on Mike’s life? (5 marks)
Using the Capital Needs Analysis, how much life insurance is required on Mary’s life? (5marks)
Identify the types of expenses which are least likely to change in the event of the death of a spouse. (1 mark)
Identify the types of expenses which are most likely to change in the event of the death of a spouse. (1 mark)
Identify what items are most likely to change if this couple were doing this analysis 20 years in the future (ignore inflation)? (1mark)
Would you recommend Term insurance or Whole Life insurance? Explain why. (1 mark)
Are there riders or other types of life insurance you would suggest for Mike and Mary? (1 mark)
To pay off all debts and funeral expenses, and to cover the reduction in Mike's income, $775,000 of life insurance is required on Mike's life.
To pay off all debts and funeral expenses, and to replace Mary's income, $925,000 of life insurance is required on Mary's life.
The types of expenses least likely to change in the event of the death of a spouse are property taxes, homeowner's insurance, and vehicle registration fees.
The types of expenses most likely to change in the event of the death of a spouse are income taxes, daycare costs, and one spouse's income.
In 20 years, the couple's children will likely be finished with college and out of the house, meaning the daycare and education expenses will no longer be relevant. However, healthcare costs and retirement savings may become more important.
Term insurance is recommended because it provides a higher death benefit for a lower premium and can be tailored to fit the length of time the insurance is needed.
A critical illness rider may be recommended for both Mike and Mary to provide a lump-sum payment if they are diagnosed with a serious illness.
Using the Capital Needs Analysis, the required amount of life insurance on Mike's life is $775,000, which includes paying off all debts, covering funeral expenses, and replacing 20% of his income to allow him to spend more time with his children.
On the other hand, the required amount of life insurance on Mary's life is $925,000, which includes paying off all debts, covering funeral expenses, and replacing her income as she would stop working if Mike were to die prematurely.
It is recommended to choose term insurance because it provides a higher death benefit for a lower premium and can be customized to fit the length of time the insurance is needed.
Additionally, a critical illness rider may be recommended for both Mike and Mary to provide a lump-sum payment if they are diagnosed with a serious illness.
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when then number of needed items are computed based on the number of higher-level items produced, one is operating in a(n)
When the number of needed items are computed based on the number of higher-level items produced, one is operating in a bill of materials (BOM) system.
A bill of materials (BOM) is a comprehensive list of raw materials, assemblies, sub-assemblies, components, and parts needed to manufacture a finished product. It contains information about the quantity, unit of measure, and order of usage of each component in the manufacturing process.
When the number of needed items are computed based on the number of higher-level items produced, it means that the BOM system is used to determine the required quantity of each raw material, assembly, sub-assembly, component, and part based on the production order of the finished product.
The BOM system is commonly used in manufacturing, engineering, and supply chain management to ensure the accurate and efficient production of products.
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you purchased 100 shares of resorts, inc. stock at a price of $35.87 a share exactly one year ago. you have received dividends totaling $1.05 a share. today, you sold your shares at a price of $46.26 a share. what is your total dollar return on this investment?
The total dollar return on this investment is $1,144.00.
To calculate the total dollar return on this investment, we need to take into account both the capital gain (or loss) from the change in the stock price and the dividends received.
First, let's calculate the capital gain:
Capital gain = (Sale price - Purchase price) x Number of shares
Capital gain = ($46.26 - $35.87) x 100 = $1,039.00
Next, let's calculate the total dividends received:
Total dividends = Dividend per share x Number of shares
Total dividends = $1.05 x 100 = $105.00
Finally, we can calculate the total dollar return:
Total dollar return = Capital gain + Total dividends
Total dollar return = $1,039.00 + $105.00 = $1,144.00
Therefore, the total dollar return on this investment is $1,144.00.
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Demo Inc. is expected to generate a free cash flow (FCF) of $13,245.00 million this year (FCF1 = $13,245.00 million), and the FCF is expected to grow at a rate of 26.20% over the following two years (FCF and FCF3). After the third year, however, the FCF is expected to grow at a constant rate of 4.26% per year, which will last forever (FCF4). Assume the firm has no nonoperating assets. If Demo Inc.'s weighted average cost of capital (WACC) is 12.78%, what is the current total firm value of Demo Inc.? (Note: Round all intermediate calculations to two decimal places.) $219,541.28 million $297,727.14 million $263,449.54 million $39,590.99 million
the current total firm value of Demo Inc. is $249,227.14 million. The closest option to this value is option (b) $297,727.14 million.
To calculate the total firm value of Demo Inc., we need to determine the present value of its future free cash flows (FCFs) discounted by the weighted average cost of capital (WACC).
1: Calculate the FCFs for years 2 and 3
FCF2 = FCF1 x (1 + g) = $13,245.00 million x (1 + 26.20%) = $16,722.69 million
FCF3 = FCF2 x (1 + g) = $16,722.69 million x (1 + 26.20%) = $21,100.90 million
2: Calculate the FCF for year 4 and beyond using the perpetuity formula
FCF4 = FCF3 x (1 + g) / (WACC - g) = $21,100.90 million x (1 + 4.26%) / (12.78% - 4.26%) = $303,321.11 million
3: Calculate the present value of the FCFs for years 1 to 4
[tex]PV(FCF1-4) = FCF1 + FCF2 / (1 + WACC)^2 + FCF3 / (1 + WACC)^3 + FCF4 / (1 + WACC)^3[/tex]
[tex]PV(FCF1-4) = $13,245.00 million + $16,722.69 million / (1 + 12.78%)^2 + $21,100.90 million / (1 + 12.78%)^3 + $303,321.11 million / (1 + 12.78%)^3[/tex]
PV(FCF1-4) = $13,245.00 million + $13,710.70 million + $15,474.14 million + $206,797.30 million
PV(FCF1-4) = $249,227.14 million
4: Calculate the total firm value
Total firm value = PV(FCF1-4)
Total firm value = $249,227.14 million.
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