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business Finance

assuming that competition drives down profitability to 12.5% in year 6, 12% year 7, 11.5% year 8, 9% year 9. what is the value of the concatenator business? assume 10% cost of capital.

Pas Assessment a Saved Help Save & Exit Submit - AA. Cell Styles - Clipboard Font Alignment Styles Consider the table given below to answer the following question B25 - f D E A B 1 PV discounted value of all the FCF + discounted value of terminal FC 2 Asset value Earning Net investment Free cash flow (FCE) Return on equity (ROE) Asset growth rate Earnings growth rate Year 8 9 10 11.00 12.43 14.05 15.87 17.46 19.20 21.13 22.60 24.1925.88 1.43 1.62 1.83 2.40 2.54 2.60 2.18 2.33 1.43 1.62 1.59 1.75 1.92 1.40 1.58 1.69 1.81 0.48 0.52 0.48 1.06 1.02 0.48 0.52 0.13 0.13 0.13 0.13 0.13 0.125 0.12 0.125 0.09 0.09 0.1 .20 0.10 0.10 0.07 0.07 0.07 0.07 0.13 0.13 0.13 0.10 0.06 0.06 0.03 -0.16 0.07 3 Here the terminal value represents the present value of all yhe future cash flows till infinit 4 5 Terminal value = FCF of year x/(cost of capital - growth of earnings) 6 7 Use FCF year of when it begins (exclude o value years) Assuming that competition drives down profitability (on existing assets as well as new investment) to 12.5% in year 6.12% in year 7. 11.5% in year 8, and 9% in year 9 and all later years. What is the value of the concatenator business? Assume 10% cost of capital (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) o 10% 052 Present value 15 9.50 million 4 5 0.48 year 0.52 year 0.48 year 1.06 year 1.02 year 6 7 8 9 0.48 year 10 Discount rate (AKA cost of capital) 11 Free cash flow year x (10 in this case) 12 earnings growth rate year x (10 in this case) 13 Free cash flow year 4 14 Free cash flow year 5 15 Free cash flow year 6 16 Free cash flow year 7 17 Free cash flow year 8 18 Free cash flow year 9 o 19 20 1 21 b 23 terminal value 24 PV 25 23 26 26 27 28 17.33333 9.50 2.15 29 + Concanter PV Pr 7-13 Expected ROR Sustainable growth rate Accessibility: Investigate Ready Consider the table given below to answer the following question. Year 1.62 1.83 Asset value Earnings Net investment Free cash flow (FCF) Return on equity (ROE) Asset growth rate Earnings growth rate 1 2 3 4 5 6 7 10 11.00 12.43 14.05 15.87 17.46 19.20 21.13 22.60 24.19 25.88 1.43 1.83 2.06 2.27 2.40 2.54 2.60 2.18 2.33 1.43 1.62 1.59 1.75 1.92 1.48 1.58 1.69 1.81 0.48 0.52 0.48 1.06 1.02 0.48 0.52 0.13 0.13 0.13 0.13 0.125 0.12 0.115 0.09 0.09 0.13 0.13 0.13 0.10 0.10 0.10 0.07 0.07 0.07 0.07 0.13 0.13 0.13 0.10 0.06 0.06 0.03 -0.16 0.07 0.13 Assuming that competition drives down profitability (on existing assets as well as new investment) to 12.5% in year 6, 12% in year 7, 11.5% in year 8, and 9% in year 9 and all later years. What is the value of the concatenator business? Assume 10% cost of capital. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Present value $ 9.50 million Continue Pas Assessment a Saved Help Save & Exit Submit - AA. Cell Styles - Clipboard Font Alignment Styles Consider the table given below to answer the following question B25 - f D E A B 1 PV discounted value of all the FCF + discounted value of terminal FC 2 Asset value Earning Net investment Free cash flow (FCE) Return on equity (ROE) Asset growth rate Earnings growth rate Year 8 9 10 11.00 12.43 14.05 15.87 17.46 19.20 21.13 22.60 24.1925.88 1.43 1.62 1.83 2.40 2.54 2.60 2.18 2.33 1.43 1.62 1.59 1.75 1.92 1.40 1.58 1.69 1.81 0.48 0.52 0.48 1.06 1.02 0.48 0.52 0.13 0.13 0.13 0.13 0.13 0.125 0.12 0.125 0.09 0.09 0.1 .20 0.10 0.10 0.07 0.07 0.07 0.07 0.13 0.13 0.13 0.10 0.06 0.06 0.03 -0.16 0.07 3 Here the terminal value represents the present value of all yhe future cash flows till infinit 4 5 Terminal value = FCF of year x/(cost of capital - growth of earnings) 6 7 Use FCF year of when it begins (exclude o value years) Assuming that competition drives down profitability (on existing assets as well as new investment) to 12.5% in year 6.12% in year 7. 11.5% in year 8, and 9% in year 9 and all later years. What is the value of the concatenator business? Assume 10% cost of capital (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) o 10% 052 Present value 15 9.50 million 4 5 0.48 year 0.52 year 0.48 year 1.06 year 1.02 year 6 7 8 9 0.48 year 10 Discount rate (AKA cost of capital) 11 Free cash flow year x (10 in this case) 12 earnings growth rate year x (10 in this case) 13 Free cash flow year 4 14 Free cash flow year 5 15 Free cash flow year 6 16 Free cash flow year 7 17 Free cash flow year 8 18 Free cash flow year 9 o 19 20 1 21 b 23 terminal value 24 PV 25 23 26 26 27 28 17.33333 9.50 2.15 29 + Concanter PV Pr 7-13 Expected ROR Sustainable growth rate Accessibility: Investigate Ready Consider the table given below to answer the following question. Year 1.62 1.83 Asset value Earnings Net investment Free cash flow (FCF) Return on equity (ROE) Asset growth rate Earnings growth rate 1 2 3 4 5 6 7 10 11.00 12.43 14.05 15.87 17.46 19.20 21.13 22.60 24.19 25.88 1.43 1.83 2.06 2.27 2.40 2.54 2.60 2.18 2.33 1.43 1.62 1.59 1.75 1.92 1.48 1.58 1.69 1.81 0.48 0.52 0.48 1.06 1.02 0.48 0.52 0.13 0.13 0.13 0.13 0.125 0.12 0.115 0.09 0.09 0.13 0.13 0.13 0.10 0.10 0.10 0.07 0.07 0.07 0.07 0.13 0.13 0.13 0.10 0.06 0.06 0.03 -0.16 0.07 0.13 Assuming that competition drives down profitability (on existing assets as well as new investment) to 12.5% in year 6, 12% in year 7, 11.5% in year 8, and 9% in year 9 and all later years. What is the value of the concatenator business? Assume 10% cost of capital. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Present value $ 9.50 million Continue