Answer all this question,with all calculation and explanation

Homework: Complete the following questions and turn in your solutions by the assigned due date. 1. Consider a firm with the financial characteristics described below. Use this information to answer the following valuation questions: WACC = 8.345% Book value of Equity = $60.0 mil Book value of Debt = $100 mil Mkt value of Debt = $100 mil Cost of equity = 10.0% Cost of debt = 4.0% Financial Forecast for Year t+1: EBIT - Taxes (at 40%) = EBIT(1-T) - Reinvestment (at 20%) = FCFF $40.00 mil -16.00 24.00 -4.80 $19.20 mil Assuming cash flows grow at a stable rate of 3% per year, use discounted cash flows to estimate the value of the firm and the value of the firm's equity. 2. You are trying to estimate beta for your company. Your company operates in 2 types of businesseshospitability & airline. You gathered the following information about a group of companies operating in both industries: Hospitality: Firm Beta Debt Equity Tax Rate A 1.5 $5,800 $8,000 40% B 1.2 $500 $2,000 32% C 1.7 $1000 $3,000 35% Airline: Firm S D Beta 1.35 0.9 Debt $4,430 $946 Equity $10,000 $10,000 Tax Rate 33% 42% Your firm has a debt equity ratio of 30% and faces a tax rate of 35%. Further analysis of your company indicated that 30% of total revenues are generated by the hospitality segment & the remainder by the airline segment. Estimate Beta for your company. 3. of Abercrombie & Fitch. Based on Abercrombie's future operating lease commitments, you estimate that the firm's operating lease debt has a value of $2,648 million and you assume a depreciable life of 10 years on the operating lease assets. Abercrombie's reported operating income equals $590 million. In addition, the firm has an operating lease expense of $410 million and a cost of debt equal to 3%. The firm's effective and marginal tax rates are both 40%. Calculate the firm's adjusted value of after-tax operating income after accounting for operating lease debt using each of the two methods we discussed in class. 4. You are valuing Genentec and have decided to capitalize the firm's R&D expenses over a 10-year life. Genentec's operating income in the most recent year was $5,329 million and the R&D expense in the most recent year was $2,800 million. Using the firm's past history of R&D expenses, you estimate that the current year's R&D amortization is $1,931 million and the unamortized value of R&D remaining at the end of the year is $12,000 million. The effective and marginal tax rates are both equal to 36%. The firm also has CapEx of $1,730 million, depreciation of $1,280 million, and an increase in non-cash working capital of $320 million. Using this information, calculate the value of FCFF for this firm both before and after adjusting for the capitalization of R&D. 7. 8. For the most recent fiscal year, Wal-Mart had earnings per share (EPS) of $5.13 and dividends per share of $1.59. The return on equity (ROE) for the firm is 18%, but is expected to increase during the coming year to 21%. Based on this information, calculate the fundamental growth in EPS for Wal-Mart in the coming year. You are valuing a firm using a free cash flow to equity (FCFE) model. You have collected the following information for the firm. EBIT Net Income Capital Expenditures Depreciation Increase in Working Capital Debt-to-Capital Return on Capital (ROC) Return on Equity (ROE) Tax Rate 1972.8 572.8 220.4 111.1 79.5 53.0% 13.0% 26% 38.0% Use the information above to calculate the Reinvestment Rate & growth rate in operating income