Ask Question, Ask an Expert


Ask Basic Finance Expert

You have been asked to estimate the value of General Communications, a telecomm firm. General Communications has a debt to capital ratio of 30%, a beta of 1.10 and a pre-tax cost of debt of 7.5%. The firm had earnings before interest and taxes of $ 600 million in 1998, after depreciation charges of $ 300 million. The firm had capital expenditures of $ 370 million, and non-cash working capital increased by $ 50 million during 1998. The firm also had a book value of capital of $ 2 billion at the beginning of 1998. (The treasury bond rate is 5%, the market risk premium is 6.3% and the firm has a tax rate of 40%). Assuming that the firm is in stable growth, and that the return on capital and reinvestment rates from 1998 can be sustained forever, estimate the value of the firm

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M943047

Have any Question? 

Related Questions in Basic Finance

Capital-budgeting criteriathe net present value npv of a

Capital-Budgeting Criteria The net present value (NPV) of a project is a measure of the difference between the project's value and its cost. The internal rate of return (IRR) is another measure of the project's attractiv ...

1 the price of ervin corp stock will either be 60 or 80 at

1) The price of Ervin Corp. stock will either be $60 or $80 at the end of the year. Call options are available with one year until expiration. T-bills currently yield 3.26 %. Suppose the current price of Ervin stock is $ ...

Assessment taskyou are in the final stage of the selection

Assessment Task You are in the final stage of the selection process for the job of assistant financial analyst at the Antipodes Mineral Resources company (AMR). This involves a test of your understanding of basic financi ...

1 the beta 079 for network service provider verisign inc

1. The β = 0.79 for network service provider VeriSign, Inc. (VRSN), and β = 1.34 for video game supplier Electronic Arts Inc. (ERTS). If the market return is expected to be 10% and the risk-free rate is 4%, calculate the ...

Problems-1 cummingsnbsp has eat depreciation expense

PROBLEMS- 1. Cummings  has EAT, depreciation expense, capital expenses, debt and debt principal payments of $9m, $2.8m, $1.3m,  $40m and $1.5m respectively. Between the first and the second years, it has current assets o ...

Linda from problem 44 is now 18 years old five years have

Linda (from problem 44) is now 18 years old (five years have passed), and she wants to get married instead of going to school. Your parents have accumulated the necessary funds for her education. Instead of her schooling ...

You must show your work for all of the problems1 you have

You must show your work for all of the problems. 1. You have accumulated $508,894 for your retirement. How much money can you withdraw for the next 25 years in equal annual end-of-the-year cash flows if you invest the mo ...

1 which of the following will only be executed if the

1. Which of the following will only be executed if the order's price conditions are met? An unlimited order A trade A limit order A spread 2. A 5.5 percent corporate coupon bond is callable in four years for a call premi ...

1 in your own words which major us trading partner

1. In your own words, which major U.S. trading partner currently has the greatest country risk? Explain. Should the U.S. change its economic strategy with this country? Why/ why not? 2. Please discuss about the current U ...

We covered many important topics during this class

We covered many important topics during this class. Understanding spending and income, cutting expenses, saving and investing money, building an emergency fund, improving credit, getting out of debt, protecting your asse ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate