FIN515_Homework_6_Juan_M_Gutierrez

# FIN515_Homework_6_Juan_M_Gutierrez - Homework Assignment 6...

This preview shows page 1. Sign up to view the full content.

This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Homework Assignment 6 Week # 6 Problems ( Pg.503) 12-1 AFN Equation 2010 2011 Sales expect to raise at 20% 5,000,000 6,000,000 Assets 3,000,000 ? liabilities 1,000,000 ? account payable 250,000 ? notes payable 500,000 ? accruals 250,000 ? after-tax profit margin (MS) 5% payout ration 70% Additional funds needed (AFN) = Projected increase in assets – spontaneous increase in liabilities – any increase in retained earnings AFN = 3,000,000 1,000,000- 500,000 1,000,000- \$0.05 6,000,000 1- 0.70 5,000,000 5,000,000 AFN = 0.6 1,000,000- 0.1 1,000,000- 300,000 0.30 AFN = 600,000- 100,000- 90,000 410,000 Answer: the AFN is at \$410,000 Problems ( Pg.549-550) 13-2 Value of of Constant Growth Firm 400,000 5% 420,000 WACC 12% 420,000 (12% - 5%) 420,000 7% Value of Operations: 6,000,000 Answer: the EMC's value of Operations is \$ 6,000,000 13-3 Horizon Value Actual Projected 2010 2011 2012 2013 Free Cash Flow in millions \$606.82 \$667.52 \$707.55 \$750.00 first, find the growth rate, g = (750 - 707.55)/ 707.50first, find the growth rate, g = (750 - 707....
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online