Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ponent venues, for an its pares + You hattestimate the optimal that currently maintaine wurkalot 10 of revenues The firma month has nwoner of 100

image text in transcribed
ponent venues, for an its pares + You hattestimate the optimal that currently maintaine wurkalot 10 of revenues The firma month has nwoner of 100 million and after- opera home of $10 million, and it expects the latter to 50 a year in perpetuity. The current cont of capital is 11. The following table provides estimates of growth and costs of capital at different levels of working capital, ranging from 0% to 100%. Working Capital as % of Revenue Expected Growth 4.75 5.00 5.20 5.35 Cost of Capital C%8 10.90 11.00 11.11 11.23 11.36 11.50 11.65 10 20 30 40 50 60 70 80 90 100 5.45 5.50 5.54 5.55 5.55 5.55 5.55 11.80 11.95 12.10 12.35 .. Estimate the value of the firm at the current work- ing capital ratio. b. Estimate the optimal working capital proportion for this firm c. What would the optimal working capital propor tion for this firm be if the cost of capital were unaf fected by the changes in working capital? ponent venues, for an its pares + You hattestimate the optimal that currently maintaine wurkalot 10 of revenues The firma month has nwoner of 100 million and after- opera home of $10 million, and it expects the latter to 50 a year in perpetuity. The current cont of capital is 11. The following table provides estimates of growth and costs of capital at different levels of working capital, ranging from 0% to 100%. Working Capital as % of Revenue Expected Growth 4.75 5.00 5.20 5.35 Cost of Capital C%8 10.90 11.00 11.11 11.23 11.36 11.50 11.65 10 20 30 40 50 60 70 80 90 100 5.45 5.50 5.54 5.55 5.55 5.55 5.55 11.80 11.95 12.10 12.35 .. Estimate the value of the firm at the current work- ing capital ratio. b. Estimate the optimal working capital proportion for this firm c. What would the optimal working capital propor tion for this firm be if the cost of capital were unaf fected by the changes in working capital

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

Financial Management For Public Health And Not For Profit Organization

Authors: Steven A. Finkler

3rd International Edition

0138152772, 9780138152772

More Books

Students also viewed these Finance questions

Question

Be prepared to address excessive absenteeism

Answered: 1 week ago