Given the data in the above table, what is the terminal value of the business (using the growing perpetuity formula)? 3400 given the data in the above table, calculate market capitalization of this hypothetical company. 540000Review Later$100,000$460,000$540,000$400,000
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Answer:
Given the data in the above table, what is the terminal value of the business (using the growing perpetuity formula)? 3400iven the data in the above table, calculate market capitalization of this hypothetical company. 540000Review Later$100,000$460,000$540,000$400,000Cost of Equity5%Cost of debt7%Debt-to-equity ratio1.5Given the data in the above table, what is the weighted average cost of capitalof this company?Review Later6.2%3.7%4.0%5.9%Which of the following companies has the lowest degree of leverage?Review Later50% Debt, 50% Equity90% Debt, 10% Equity20% Debt, 80% Equity30% Debt, 70% EquityWhich of the following statements is correct?
Answer:
- The value of an asset, business, or project after the forecasted period when future cash flows can be estimated is known as terminal value (TV). Terminal value assumes that a company will continue to grow at a constant rate after the forecast period. Terminal value is frequently a significant portion of total assessed value.
- The total value of all a company's shares of stock is referred to as its market cap (or market capitalization). It is calculated by multiplying a stock's price by the number of outstanding shares. A company with 20 million shares selling at $50 per share, for example, would have a market cap of $1 billion.
- Market capitalization is calculated as follows:
market cap = share price x number of shares outstanding.
Terminal Value = [Free Cash Flow X (1+growth)]/[(Cost of capital – growth)]
TV = [100 X (1+0.02)]/[0.05-0.02]
= 3400
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