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"Problem 13-5 'TUTOR WILL YOU PLEASE PUT ANSWER ON EXCEL SPREAD SHEET , THANK YOU' Value Drivers and Horizon Value of Constant Growth Firm

"Problem 13-5 'TUTOR WILL YOU PLEASE PUT ANSWER ON EXCEL SPREAD SHEET , THANK YOU'
Value Drivers and Horizon Value of Constant Growth Firm

Value-Based Management



You are given the following forecasted information for the year 2014: sales = $425,000,000, operating profitability (OP) = 5%, capital requirements (CR) = 47%, growth (g) = 4%, and the weighted average cost of capital (WACC) = 9.8%. If these values remain constant, what is the horizon value (i.e., the 2014 value of operations)? (Hint: Use Equation V op (at time N)   =   Capital N   +   {[Sales N (1   +   g)WACC-g][OP   -   WACC (CR1   +   g)]} .) Round your answer to the nearest dollar.

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Finance-8081243.xls

Problem 13-5
Horizon Value of Vop =
= ((425000000*1.04)/(.098 - .04) * ((.05 - .098*(.47+.04)
$152,413.79

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