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Management plans

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Question

Icarus Airlines is proposing to go public, and you have been given the task of estimating the value of its equity.

Management plans to maintain debt at 21% of the company’s present value, and you believe that at this capital structure the company’s debtholders will demand a return of 7% and stockholders will require 14%. The company is forecasting that next year’s operating cash flow (depreciation plus profit after tax at 40%) will be $59 million and that investment expenditures will be $21 million. Thereafter, operating cash flows and investment expenditures are forecast to grow in perpetuity by 4% a year.

a. What is the total value of Icarus? (Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole dollar amount.)  

  Total value $ million   

b. What is the value of the company’s equity? (Do not round intermediate calculations. Enter your answer in millions rounded to 1 decimal place.)

  Company’s equity $ million  

 
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coupon bond

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Question

Olympic Sports has two issues of debt outstanding. One is a 8% coupon bond with a face value of $24 million, a

maturity of 15 years, and a yield to maturity of 9%. The coupons are paid annually. The other bond issue has a maturity of 20 years, with coupons also paid annually, and a coupon rate of 9%. The face value of the issue is $29 million, and the issue sells for 96% of par value. The firm’s tax rate is 30%.

a. What is the before-tax cost of debt for Olympic? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

  Before-tax cost of debt %   

b. What is Olympic’s after-tax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

  After-tax cost of debt % 

 
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a document referring to MGM Resorts International

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Question

ATTENTION
Attached is a document referring to MGM Resorts International. This is a compiled

group assignment, however, due to time constraints, there is one more part of the project that needs to be completed: COMPANY ANALYSIS

Below is the assignment instructions just to fill you in a little more.

*Note:: The only part that needs to be included is COMPANY ANALYSIS, which should be inserted into the attached Document following CUSTOMER ANALYSIS on page 7. The rest is completed already.

Thanks

Assignment instructions:::::::::::::::::::::::::::::::::::::::::::::

Collaborative Marketing Plan Draft 2 Instructions

Include the following in your Group Discussion Board Forum:

A thread with Draft 2 of your Marketing Plan (MP) attached as a Word file. Your draft must include the following section:

  • Situation Analysis: Please review pp. 49–52 of the sample MP. You should notice that Section 4 (Situation Analysis) contains 5 major elements. They are:
  • SWOT analysis
  • Industry Analysis
  • Key Competitors
  • Company Analysis
  • Customer Analysis

Your Collaborative Marketing Plan Draft 2 must be submitted by 11:59 p.m. (ET) on Monday of Module/Week 4.

 
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cash flows

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Question

Consider projects A and B with the following cash flows:   C0 

C1  C2   C3   

A −$32  +$16  +$16  +$16  

B − 57  + 32  + 32  + 32  

What is the NPV of each project if the discount rate is 12%?

Project A:

Project B:

 
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