1 Jayden and Ziad own four identical pizza shops in downtown Newark Each shop has a debt to equity ratio of 35 percent and makes interest payments of $52,000 at the end of each year The cost of the firm's levered equity is 16 percent Each store estimates that annual sales will be $1 450 million The annual cost of goods sold will be $780,000 The owners estimated annual SG A costs will be $450,000 Note also that these cash flows are expected to remain the same forever Estimated corporate tax is 21 percent Use the flow to equity approach to determine the value of the company's equity Determine the total value of J Z Pizza shops to date 2 Albieri Kevin Investment Firm is an unlevered corporation which has $250 million of excess cash and 100 million shares outstanding with a current market price of $40 per share The board of directors of Albieri Kevin Investment Firm has declared a special dividend of $250 million Calculate the ex dividend price of a share in Albieri Kevin Investment Firm If the board had decided to use the cash to do a one time share repurchase, what would be the price of the shares once the repurchase is completed 3 The Adam Corporation is evaluating a project to setup a plant to manufacture electronic gadgets According to the CFO, the business appears to be profitable with growth opportunities The project will provide a net cash inflow of $250,000 for the firm during the first year Cash flows are projected to grow at a rate of 2 8 percent per year forever The project requires an initial investment of $3,700,000 If the company requires a return of 9 percent on such projects, should the business be started Provide your analysis to justify your position 4 Jorge Garcia Inc has declared a $13 75 per share dividend Suppose capital gains are not taxed, but dividends are taxed at 15 percent New IRS regulations require that taxes be withheld when dividend is paid The company's stock sells for $95 per share and is about to go ex dividend There are 125,000 shares of stock outstanding Calculate the after tax dividend amount of the firm Calculate the ex dividend stock price of the firm

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1.Jayden and Ziad own four identical pizza shops in downtown Newark. Each shop has a debt-to-equity ratio of 35 percent and makes interest payments of

1.Jayden and Ziad own four identical pizza shops in downtown Newark. Each shop has a debt-to-equity ratio of 35 percent and makes interest payments of $52,000 at the end of each year. The cost of the firm's levered equity is 16 percent. Each store estimates that annual sales will be $1.450 million. The annual cost of goods sold will be $780,000. The owners estimated annual SG&A costs will be $450,000. Note also that these cash flows are expected to remain the same forever. Estimated corporate tax is 21 percent.

Use the flow to equity approach to determine the value of the company's equity.
Determine the total value of J&Z Pizza shops to date

2. Albieri & Kevin Investment Firm is an unlevered corporation which has $250 million of excess cash and 100 million shares outstanding with a current market price of $40 per share. The board of directors of Albieri & Kevin Investment Firm has declared a special dividend of $250 million.

Calculate the ex-dividend price of a share in Albieri & Kevin Investment Firm.
If the board had decided to use the cash to do a "one-time" share repurchase, what would be the price of the shares once the repurchase is completed?

3. The Adam Corporation is evaluating a project to setup a plant to manufacture electronic gadgets.

According to the CFO, the business appears to be profitable with growth opportunities. The project will provide a net cash inflow of $250,000 for the firm during the first year. Cash flows are projected to grow at a rate of 2.8 percent per year forever. The project requires an initial investment of $3,700,000.

If the company requires a return of 9 percent on such projects, should the business be started?
Provide your analysis to justify your position.

4. Jorge Garcia Inc. has declared a $13.75 per-share dividend. Suppose capital gains are not taxed, but dividends are taxed at 15 percent. New IRS regulations require that taxes be withheld when dividend is paid. The company's stock sells for $95 per share and is about to go ex-dividend. There are 125,000 shares of stock outstanding.