Consider the table given below to answer the following question. Asset value Earnings Net investment. Free...

 

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Consider the table given below to answer the following question. Asset value Earnings Net investment. Free cash flow (FCF) Return on equity (ROE) Asset growth rate. Earnings growth rate Year 3 4 5 6 1 2 7 8 9 10 15.00 16.80 18.82 21.07 22.97 25.04 27.29 28.93 30.66 32.50 1.80 2.02 2.26 2.53 2.76 2.88 3.00 3.04 2.45 2.60 1.80 2.02 2.26 1.90 2.07 2.25 1.64 1.74 1.84 1.95 0.63 0.69 0.63 1.36 1.30 0.61 0.65 0.12 0.12 0.12 0.12 0.12 0.115 0.11 0.105 0.08 0.08 0.12 0.12 0.12 0.09 0.09 0.09 0.06 0.06 0.06 0.06 0.12 0.12 0.12 0.09 0.04 0.04 0.01 -0.19 0.06 Assuming that competition drives down profitability (on existing assets as well as new investment) to 11.5% in year 6, 11% in year 7, 10.5% in year 8, and 8% in year 9 and all later years. What is the value of the concatenator business? Assume 11% cost of capital. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) > Answer is complete but not entirely correct. Present value $ 7.14 million < Prev 8 of 10 www www Next > Consider the table given below to answer the following question. Asset value Earnings Net investment. Free cash flow (FCF) Return on equity (ROE) Asset growth rate. Earnings growth rate Year 3 4 5 6 1 2 7 8 9 10 15.00 16.80 18.82 21.07 22.97 25.04 27.29 28.93 30.66 32.50 1.80 2.02 2.26 2.53 2.76 2.88 3.00 3.04 2.45 2.60 1.80 2.02 2.26 1.90 2.07 2.25 1.64 1.74 1.84 1.95 0.63 0.69 0.63 1.36 1.30 0.61 0.65 0.12 0.12 0.12 0.12 0.12 0.115 0.11 0.105 0.08 0.08 0.12 0.12 0.12 0.09 0.09 0.09 0.06 0.06 0.06 0.06 0.12 0.12 0.12 0.09 0.04 0.04 0.01 -0.19 0.06 Assuming that competition drives down profitability (on existing assets as well as new investment) to 11.5% in year 6, 11% in year 7, 10.5% in year 8, and 8% in year 9 and all later years. What is the value of the concatenator business? Assume 11% cost of capital. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) > Answer is complete but not entirely correct. Present value $ 7.14 million < Prev 8 of 10 www www Next >

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Formulae In this A B 1 2 Year 3 Free cash flowF... View the full answer