Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Opex Capital is a small investment advisory firm located in Portland, Oregon, that has been hired by Winston Winery to estimate the value of Hilco Wines. Hilco is a small winery that is being considered for purchase by Winston. Opex has obtained the financial statements of Hilco and prepared the following estimates of the firm's free cash flow for the next five years:

Year 1 = $100,000 cash flows, Year 2 = $120,000 cash flows, Year 3 = $135,000 cash flows, Year 4 = $150,000 cash flows, Year 5 = $175,000 cash flows

At the end of five years, Opex has estimated that the winery should be worth approximately five times its Year 5 cash flow.

a) If the appropriate discount rate for valuing the winery is 15%, what is your estimate of the firm's enterprise value?

b) Winston Winery plans to borrow $400,000 to help finance the purchase. What is Hilco's equity worth?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M945170

Have any Question? 


Related Questions in Basic Finance

1 what are order effects and how does counterbalancing help

1. What are order effects, and how does counterbalancing help us deal with them? 2. Distinguish between treatment, confound, and error variance. 3. Which is worse--confound variance or error variance? Why?

2015 tesla motors - 2e how do the findings compare with the

2015 Tesla Motors - 2E. How do the findings compare with the industry averages? Explain why you selected the proposed industry. If the company does not have a clear comparable industry then compare with three closest com ...

Select one construct from the following Select one construct from the following list:

Select one construct from the following list: self-esteem femininity/masculinity creativity hunger motivation fear Briefly describe how it might be measured using: a. an operational definition based on selfreport (for ex ...

Ritz furniture has a contribution margin ratio of 011 if

Ritz furniture has a contribution margin ratio of 0.11. If fixed cost are $172,800 how man dollars of revenue must the company generate in order to reach the break-even point?

1 what are the main advantages and disadvantages to

1) What are the main advantages, and disadvantages, to entering a futures hedge? Explain your answer with reference to a futures contract on wheat. Assume the current price is 400 cents per bushel and the futures price i ...

1 what is the yield to maturity why is the yield to

1. What is the yield to maturity? Why is the yield to maturity a better measure of the interest rate on a bond than is the coupon rate? 2. Write an expression showing the relationship among the price of a coupon bond, th ...

A human cannot hear sound at a frequency of 100 khz or

A human cannot hear sound at a frequency of 100 kHz or sound at 102 kHz. But if you walk into a room in which two sources are emitting sound waves, one at 100 kHz and the other at 102 kHz, you'll hear sound. Explain.

1 what is the significance of the passive activity loss

1. What is the significance of the passive activity loss limitation (PAL) rules for real estate investors? 2. What factors affect a property's projected NOI? 3. ARGUS. Refer to the Monument Office Building example. Suppo ...

Abc company claims that the proportion of its employees

ABC Company claims that the proportion of its employees investing in individual investment accounts is higher than national proportion of 50%. A survey of 100 employees in ABC Company indicated that 58 of them have inves ...

In the capm investors should be compensated for accepting

"In the CAPM, investors should be compensated for accepting systematic risk; for the APT model, investors are rewarded for accepting both systematic risk and unsystematic risk." Do you agree with this statement?

  • 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

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro