$134.9 + $397.5 = $532.4 million. 4. Free Cash Flow for 2011 is obtained through NOPAT less – Investment in Capital = $65.16 – ($532.4 - $502.2) = $65.16 - $30.2 = $34.96 million is the Free Cash Flow as of 12/31/2011. B. Page 547 of the text states that terminal‚ or horizon‚ value is the value of operations at the end of the explicit forecast period. It is also called the continuing value‚ and it is equal to the present value of all free cash flows beyond the forecast period‚ discounted back
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CHAPTER 10 Cash Flows and Other Topics in Capital Budgeting ANSWERS TO END-OF-CHAPTER QUESTIONS 10-1. We focus on cash flows rather than accounting profits because these are the flows that the firm receives and can reinvest. Only by examining cash flows are we able to correctly analyze the timing of the benefit or cost. Also‚ we are only interested in these cash flows on an after tax basis as only those flows are available to the shareholder. In addition‚ it is only the incremental
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Discounted Cash Flow Valuation of Aggregate Reserves Discounted Cash Flow Valuation – Proved Developed Reserves Discounted Cash Flow Valuation – Proved Undeveloped Reserves Discounted Cash Flow Valuation – Probable Reserves Discounted Cash Flow Valuation – Possible Reserves Question 3 To value MW Petroleum we would consider the assets in place and the option bearing assets discretely. The assets in place consist of the proved developed reserves since they are already producing a
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team 3. Building a new 60‚000 seat stadium with external financing 4. Building a new stadium while acquiring a new top scorer. Discount cash flow (DCF) analysis In order determine the suitable option; a discounted cash flow method was used to project THFC free cash flow for the next 13 years. The following assumptions have been made in the estimation of cash flow: Market Rate of 11% was assumed Discount Rate is 10.02‚ method used is WACC Interest payments are not included. Net Investment
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buying all the remaining shares of the company at different prices per share. Roche was going to purchase the remaining shares for $89.00 per share but later offered to pay $86.50 a share due to changes in the market‚ which would require $42 billion in cash. In order to pay for this‚ Roche plans to pay $32 billion of the required $42 billion through
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valuing the processing plant can easily be decomposed into three distinct steps first‚ find the value of the foreseeable free cash flows. Next‚ calculate the terminal value of the project. Finally‚ take the present value of those flows. The next few paragraphs walk through each of these steps in order of progression. In the first step we analyze the data and calculate the free cash flow from the inception of the project to the foreseeable future. We opted to use Exhibit 7‚ which incorporates an 11%
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1. How does Berkshire Partners create value? Berkshire partners believes in creating values “based on successful relationships‚ hard work‚ analysis‚ and the open decision making of all individuals” (Partners) They do not see the acquiring company as just a financial investment but as an investment in a relationship between two living entities. They work hard in collaboration with the acquired firm to do the analysis and research and consult all individuals in both firms regarding the future of the
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complete an excess free cash flow analysis. This method is designed to estimate the present value of a business. To run this analysis‚ an analyst needs to determine the correct discount rate to use‚ which is also a company’s estimated weighted average cost of capital. An estimation of a company’s long-term growth rate also needs to be made. Then using this estimated growth rate an analyst needs to determine the excess free cash flow per period‚ which is the amount of cash that a business can
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....................................... 2 STOCK PRICE VALUATION .............................................................................................................. 3 Discounted Cash Flow Method (DCF) Method............................................................................. 3 Risk-free Rate (India) ............................................................................................................. 3 Beta............................................................
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Radio one analsys 1) Why does Radio One want to acquire the 12 urban stations from Clear Channel Communications in the top 50 markets along with nine stations in Charlotte‚ NC‚ Augusta‚ GA‚ and Indianapolis‚ IN? What benefits and risks? The Reasons for acquiring the 12 urban stations from Clear Channel could be the following: - Bigger African American Base: It would draw more African-American listeners than any other radio broadcaster and cover more African-American households than any
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