Question 5 There was recently a change in the leadership team at Chamalo Inc, with a...

Transcribed Image Text:

Question 5 There was recently a change in the leadership team at Chamalo Inc, with a heavier focus on reinvesting for future growth. If the company has reinvested 50% of its after-tax EBIT last year and its return on capital is 22%, what is the expected fundamental (also known as "sustainable") growth rate in earnings for the company? O 50 % 22% -11% O 22 %/50 % -44% O 50% -22% -28% Suppose you wake up to the following headline concerning the firm you are valuing: "The Board has appointed Mrs. Xu as the new CEO". You look up some more information on Mrs. Xu and find that she was previously the head of research at the self-driving car division of Google. During her 2.5-year tenure in that position, she was a key player in the acquisition of 5 rival firms. >> Which input you would likely want to immediately adjust in your valuation? O Tax rate O Cost of debt Net capital expenditure O Risk free rate Question 7 You are valuing a young company using the top-down growth approach. • Current revenues: $400 million • Size of the industry: $40,000 million. 1 pts O $1.344 billion O $537 milion O $512 milion 1 pts • You estimate a 3% growth rate for the industry over the next 10 years and a market share of 2.5% in year 10 for the company you are valuing. • What revenues are you projecting for the company in year 10? Question 5 There was recently a change in the leadership team at Chamalo Inc, with a heavier focus on reinvesting for future growth. If the company has reinvested 50% of its after-tax EBIT last year and its return on capital is 22%, what is the expected fundamental (also known as "sustainable") growth rate in earnings for the company? O 50 % 22% -11% O 22 %/50 % -44% O 50% -22% -28% Suppose you wake up to the following headline concerning the firm you are valuing: "The Board has appointed Mrs. Xu as the new CEO". You look up some more information on Mrs. Xu and find that she was previously the head of research at the self-driving car division of Google. During her 2.5-year tenure in that position, she was a key player in the acquisition of 5 rival firms. >> Which input you would likely want to immediately adjust in your valuation? O Tax rate O Cost of debt Net capital expenditure O Risk free rate Question 7 You are valuing a young company using the top-down growth approach. • Current revenues: $400 million • Size of the industry: $40,000 million. 1 pts O $1.344 billion O $537 milion O $512 milion 1 pts • You estimate a 3% growth rate for the industry over the next 10 years and a market share of 2.5% in year 10 for the company you are valuing. • What revenues are you projecting for the company in year 10?

Answer rating: 100% (QA)

The detailed answer for the above question is provided below Question 5 The input that you ... View the full answer