Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Good Times Inc. has current sales of $7,500 (in millions), an operating ratio of 6%, a capital requirement ratio of 40%, a tax rate of

Good Times Inc. has current sales of $7,500 (in millions), an operating ratio of 6%, a capital requirement ratio of 40%, a tax rate of 40% and a corporate cost of capital of 8%. Under new management sales are expected to grow 15% in Yr 1, 15% in Yr 2, 10% in Yr 3, 5% in Yr 4 and then grow at a constant rate of 4% after Yr 4. In addition, the firm has the following balance sheet items: (000,000) Short-term investments = $25 Short-term debt (notes payable) = $250 Long-term debt (bonds) = $300 Preferred stock = $30 Number of shares of common stock = 75 a) What is the firm's free cash flow at the end of Yr 1? b) What is the firms horizon value at the end of Yr 4? c) What is the firms total value today? d) What is the firms current equity value of price per share?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Project Finance

Authors: E. R. Yescombe

2nd Edition

0123910587, 9780123910585

More Books

Students also viewed these Finance questions

Question

=+3. What are the components of a social media communication audit?

Answered: 1 week ago