Hatso, a famous hat retailer chain, opens a new store in Kentucky and chooses to operate solely in the traditional physical mark
1 answer:
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Answer:
d. $34.87
Explanation:
We need to calcualte the value of the company. This is done by addingthe present vbalue of the future free cash flow of the firm.
FCF0 = 1.32 (current accounting period)
FCF 1.32 + 30% = 1.716
FCF2 FCF1 + 10% = 1.716 x 1.1 = 1.8876
FCF3 FCF + 5% = 1.8876 x 1.05 = 1.98198
From here after we use the gordon model:
WACC = 9%
grow = 5%
we use FCF instead of dividends: 1.98198
Value of the future cash flow 49,5495
Now, as this are in the future we must adjust using the present value of a lump sum:
PV 1.5743
PV 1.5888
PV 41.7048
Total: 1.5743 + 1.5888 + 41.7048 = 44,8679
Now we adjust for shrot term investment and debt outstanding:
vresent value of the future cash flow 44,8679
short term investment: 4.0000
debt outstanding <u> (14.000) </u>
Net: 34.8679
Answer:
a. project A; because its NPV is about $335 more than the NPV of project B.
Explanation:
As in the question it is mentioned that the required rate of return for project A and project B is 11.25% and 10.75% respectively.
Here we have to determined the net present value for both projects having different required rate of return
So based on the net present value the first option is correct as the project A is more than the project B
Therefore the first option should be accepted
Answer:
$842.74
Explanation:
Data provided in the question:
Loan amount = $927.86
Interest for the first month = $871.86
Now,
Daily interest rate for 30 days =
or
=
= $29.06
Now,
Doug owns the closing day,
Therefore,
Maria will pre-pay interest for 29 days i.e June 2 - 30,
= Daily interest × Number of days
= $29.06 × 29
= $842.74