Question: Need some help understanding how to do these finance problems. Question 18 3 / 3 pts This Problem Counts 3 Points Given the following information
Need some help understanding how to do these finance problems.
Question 18 3 / 3 pts This Problem Counts 3 Points Given the following information for A&M Products "Onward 2025" project, find the discount rate needed to make the project break-even (NPV=$0). A&M's tax rate is 21%. Depreciation is calculated on a straight-line basis over the life of the project with a $500 salvage value. Yr 0 Yr 1 Yr 2 Yr 3 Yr4 Capital $-12,500 Investment EBITDA $4,000 $4,000 $6,000 $3000 O 12.09% O 14.16% O 11.82% O 16.57% O 11.26%Question 27 7/7 pts Problem Counts 7 Points Authentic Products is a maker of authentic metal toys sold in elite Toy Stores and by catalog in the US and Western Europe. Authentic Products was started in January 2017 and an Equity Capital firm has expressed an interest acquiring the company. Authentic's CFO has developed a set of financial projections which are summarized in the table below (all amounts are in $000). 2022 2023 2024 2025 2026 2027 EBIT $500 $400 $400 $1,700 $2,800 $4,200 Capital Expenditures $400 $600 $1000 $1000 $800 $800 Changes in Working $400 $400 $200 $100 $100 ($100) Capital Depreciation $80 $160 $205 $210 $220 $230 Beginning after year 2027 the annual growth in EBIT is expected to be 2.20%, a rate that is projected to be constant over Authentic's remaining life as an enterprise. Beginning after 2027 Authentic's capital expenditures and depreciation are expected to offset each other (capex - depreciation = 0) and year to year changes in working capital are expected to be zero (working capital levels remain constant year over year). For discounting purposes consider 2022 as year 1. Assume a tax rate of 21% and a cost of capital of 7.25% Determine the company valuation of Authenic Products using the NPV method and the cash flow information provided above. The answer to this question was determined in Excel. Your answer may deviate slightly (if you are using a calculator) depending upon differences in truncation and rounding. Answers below are in $000. chimstructure.com/courses 228590 quizzes/315075?module_item_id-2076958 35 PM Exam II Finance (Counts 20% of Course Grade): MCiT 2803 Business Fundamentals for Analytics O $1,982 O $67,149 O $44,121 $46,106 O $3,391 O s69,133Question 28 2/2 pts Problem Counts 2 Points Continuing with Authentic Product; consider only the projected cash flows for FY2022. 2022 EBIT $500 Capital Expenditures $400 Changes in Working Capital $400 Depreciation $80 Now assume that prior to FY2022 Authentic Products had a loss carry forward of $400. Recalculate the free cash flow, including the impact of the loss carry forward, for FY2022 only Continue to assume assume a tax rate of 21%. -$241 PM Exam Il Finance (Counts 20% of Course Grade): MOT 850 Business Fundamentals for Analytics O -$641 O -$485 O $500 O -$220 O -$325rect Question 30 0 / 3 pts This Problem Counts 3 Points Assume the following data for Space Y, a publicly held firm that constructs booster stages for commercial makers of satellite launch rockets. Of Space Y's stock price of $198.46/share how much would be attributed to the firm's growth opportunity? NOTE: Some of the data in the table below is NOT relevant to this problem. Stock price $198.46 Dividend per share $1.25 Number of outstanding shares 335 million Net Income $1.173 Billion Book value per share $43.02 Discount rate 18% Effective Tax Rate 21% EBITDA $725.45 million O $186.00 $155.44 4:35 PM Exam Il Finance (Counts 20% of Course Grade): MOTT 850 Business Fundamentals for Analytics O $171.90 O $179.02 O $191.52malylies Incorrect Question 34 0 / 4 pts This Problem Counts 4 Points Charley & Waldo's World of Wonder is a science-oriented children's museum. The museum has a "free" section where children have unlimited use of science oriented exhibits and a premium section where children (or their parents) pay on a per exhibit basis. For example, one of the premium exhibits is a narrated demonstration of "Tesla Balls". Revenue earned on premium exhibits is tracked separately for each exhibit. Charley and Waldo are considering expanding their premium area and are looking at adding a new exhibit. They plan to only add one new exhibit. After viewing a number of ideas suggested by high school science teachers and children psychologists, they have narrowed the list down to three alternatives. The investment required and the anticipated free cash flow for each alternative is shown in the table below. Zip is a demonstration of friction and air resistance; Catch Air is an inverted wind tunnel that allows children to float in air as if they are flying; and G-Force is a wire and pulley system that simulates a .5G environment. If Charley and Waldo believe that the NPV technique is the best in terms of selecting capital projects, which project should they pick. In answering this question assume that the cost of capital is 6.5%. The Zip attraction will have a useful life of 6 years with zero salvage value; Catch Air would have a useful life of 3 years with zero salvage value ; and G-Force uses materials expected to wear out over a two year period (also with zero salvage value). Year Zip Catch Air G-Force Investment 600,000 -650,000 -250,000 1 250,000 300000 190,000 2 225,000 300000 110,000 175,000 250000 4 100,000 15 100,000 75000 humps:Wigstech.instructure.com/courses/213890/quizzes/313075?module_hem_id-2076958 30 0 4/14/22, 4:35 PM Exam II Finance (Counts 20% of Course Carade]: MCiT 2803 Business Fundamentals for Analytics O Catch Air Zip O G-Force O Bogus Question. You cannot use NPV to compare projects with unequal lives
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