Banoffee Ltd operates a chain of Cafes around the country. You have been providedwith the following projections for the company (in millions of Rupees)EBITNet Cap ExTotal WorkingCapitalCost of EquityPre-tax Cost of Debt1110.00306012%8%2€ 125.0037.5Debt Equity RatioThe company has a tax rate of 20%,The firm will grow at 5% forever, starting in year 4. Theworking capital currently is 48 million.a. Estimate the expected cash flows to the firm for years 1-4.b. Estimate the cost of capital each year for years 1-4.c. Estimate the terminal (Horizon) value.20%7011%7.50%20%3156.2546.58211%7%20%4 (Terminal{Horizon} year)₹172329010%7%20%

Cash flow to the firm refers to the amount of money that is available to all of the capital…

Answered: Banoffee Ltd operates a chain of Cafes…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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ABC Sdn Bhd has a gross sales of RM 12000000 for year 2021. This company needs to pay 10% for annual fixed capital, 15% for operation capital and 10% for business taxes. Based on the net profit, they plan to invest 50% of the amount into a stock market. Estimate the amount of his money after THREE (3) years for the following cases:(i) Profit forecast is based on fixed interest rate of 10% per annum.(ii) The profit forecast is 10% per annum compounded every SIX (6) month.
Q. Western Lumber Company expects to have free cash flow in the coming year of $4.25mand is expected to grow at 4% per year thereafter. The company has an equity cost of10% and a debt cost of 6% and pays corporate tax at 30%. If the company maintains adebt-to-equity ratio of 0.50, what is the value of the interest tax shield? Please answer by providing step by step solution and explaining the whole process
Choose the correct letter of answer: The following data applies to a firm: Interest Charges P10 Million, Sales/CGS P80 Million, Tax Rate 50% and Net profit margin 10%. What is the firm's interest covered ration? a. 1.6b. 2.6c. 3.6d. 4.6e. 5.6
Your Company has a perpetual EBITDA equal to USD 2,500,000 a year. Given your planned capex activity, you expect to depreciate your assets by USD 1,400,000 per year perpetually. The company’s debt-to-equity ratio is equal to 1.71, your debt is equal USD 27,000,000 and you expect the company to keep it at this amount perpetually. The pre-tax wacc of the company is equal to 7.98% and its debt has an expected return equal to 3.45%. Assume that the depreciation tax shield is as risky as the company’s debt and that the corporate tax rate is 40%. a) What is the company’s unlevered value? b) Assuming that there are 1,000,000 shares outstanding what is the share price?
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You are analysing NBM firm and obtained the following information: FCFF reported as R198 million, interest expense is R15 million. If the tax rate is 35% and the net debt of the firm increased by R20 million, what is the approximate market value of the firm if the FCFE grows at 3% and the cost of equity is 14%? R1,950 billion R2,497 billion R2,585 billion R3,098 billion R 1,893 billion
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