holders‚ dividends or equity free cash flow (equity FCF)‚ at their required rate of return. Now‚ the question would be: which cash flow should we discount? Damodaran (Damodaran Online‚ 2002) provides a straightforward answer. We should discount dividends for firms which pay dividends that are close to the equity FCF over a long period and for those companies where equity FCF is difficult to determine. On the other hand‚ we should discount equity FCF for firms that pay dividends which are considerably
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a. (1) In this case study‚ Stanley’s focus is on maximizing profits. Yes he is correct. This should be the goal of any firm and any financial manager. He should be easily able to maximize the value and also extend the wealth of the shareholders or stockholders if he continues to maximize profits. (2) There is always potential for any agency problem. Should Stanley decide to invest in the software developer‚ an investment of this nature could cause decrease in earnings per share for
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1215 | 1369 | Inc. Inventory | 2485 | 2578 | 4747 | 3108 | 1657 | 1892 | 2120 | Inc. Other Assets | 100 | 915 | 1449 | 779 | 416 | 473 | 532 | FCF | -2585 | -2654.76 | -2978.72 | 721.88 | 2985.32 | 3303.24 | 3707.28 | | | | | | | | | PV of FCF at 10% | -2350.00 | -2194.02 | -2237.96 | 493.05 | 1853.65 | 1864.59 | 1902.42 | PV of FCF at 20% | -2154.17 | -1843.58 | -1723.80 | 348.13 | 1199.73 | 1106.25 | 1034.63
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report is constructed as follows: section I introduces the selected firm briefly; section II and III gives projected income statement and balance sheet; section IV demonstrates how we calculate FCF‚ followed by firm value estimation; section V provides a sensitivity analysis of firm value to sales growth rate‚ FCF growth rate in second stage and WACC. I Company Profiles Johnson & Johnson is a U.S. multinational medical devices‚ pharmaceutical and consumer packaged goods manufacturer founded in 1886
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scheduling‚ and base all decisions on the information you have at the time the decision must be made. Process P1 P2 P3 a. b. c. Arrival Time 0.0 0.4 1.0 Burst Time 8 4 1 5.2 5.3 What is the average turnaround time for these processes with the FCFS scheduling algorithm? What is the average turnaround time for these processes with the SJF scheduling algorithm? The SJF algorithm is supposed to improve performance‚ but notice that we chose to run process P1 at time 0 because we did not know
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Joseph Taj Ahn Nyguyen J Yu Fin 423 Haddad Nov 18‚ 2014 Philip Morris Inc.: Seven Up Acquisition (A) This case discusses Philip Morris Inc. intentions to acquire the Seven-up Company in an effort to diversify their consumer goods. The decision has already been made‚ however they must decide on an offer price to buy out the company. This report will discuss PM’s acquisition strategy and its appropriateness‚ along with whether or not 7up fits the criteria of PM’s strategy. The report will further
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this report is to evaluate the potential investment of expanding production capacity at Hansson Private Label (HBL) and make a recommendation to Tucker Hansson. In this report‚ I will specifically focus on analyses of the project’s free cash flows (FCFs)‚ weighted average cost of capital (WACC) and net present value (NPV). With a sensitivity analysis‚ it can help us to observe how change in some key project variables would make the project stronger and weaker. This report can provide efficient information
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discount rate and cash flow forecasts 1. Discount rate: From the case‚ what is the discount rate you should use for MMDC? Why? 2. Expected cash flows: a. In class‚ we know that free cash flow (FCF) = EBITDA*(1 – t) + Depreciation*t - Change in NWC CAPEX. Show that we can rewrite this expression and compute FCF from FCF = EBIT*(1-t) + Depreciation - Change in Net Working Capital - Capital Expenditure. b. Compute EBIT for each year from 2010 to 2020. Compute after-tax EBIT‚ i.e. EBIT*(1-t)‚ for each of
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……………………………………………………………………… 3-4 2. The Saudi Cement Industry …………………………………………………….. 4-5 3. The Yamama Saudi Cement Company…………….…………………………... 6 4. Company Valuation ……………………………………………………………... 7-11 4.1. The Free Cash Flow Model (FCF) ………………………………………... 7 4.2. The Dividend Discount Model (DDM) …………………………………… 8 4.3. The Discounted Cash Flow Model (DCF) ………………………………... 8-9 4.4. Key Indicators ……………………………………………………………... 9-10 4.5. Peer Comparison …………………………………………………………
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Case Interco Introduction Interco is a shoe company founded in 1911. Its business has spread to other product through acquisitions. Equity analysts saw Interco as a conservative company that was not highly leveraged leading to high financial flexibility. This allowed the firm to repurchase share and make acquisitions when the opportunities were there. Interco has four major divisions; Apparel Manufacturing‚ General Retail Merchandising‚ Footwear Manufacturing and Retailing and Furniture and Home
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