Unlevered equity - Study guides, Class notes & Summaries

Financial Leverage and Capital Structure Policy Multiple Choice Questions 1. Homemade leverage is: A. the incurrence of debt by a corporation in order to pay dividends to shareholders. B. the exclusive use of debt to fund a corporate expansion project. C. the borrowing or lending of money by individual shareholders as a means of adjusting their level of financial leverage. D. best defined as an increase in a firm's debt-equity ratio. E. the term used to describe the capital structure of a lev...

Discounted Cash Flows Exam Questions With Verified Solutions A DCF values a company based on: - answerThe present value of its cash flows and the present value of its terminal value. Walk me through a DCF - answerFirst, you project out the company's financials using assumptions for revenue growth, expenses and working capital. Then you get FCF for each year which you sum up and discount to a NPV based on your discount rate, usually the WACC. Then you determine the company's terminal val...

Series 79 - Chapter 7 Discounted Cash Flow Analysis - correct answer Fundamental valuation methodology derived from the present value of its projected free cash flow (FCF) Free Cash Flow - correct answer Utilized in DCF and derived from a variety of assumptions and judgments about its expected financial performance, including sales growth rates, profit margins, capital expenditures, and net working capital (NWC) Intrinsic Value - correct answer Valuation implied for a target by a DCF. As ...

Why do you build a DCF analysis to value a company? You build a DCF analysis because a company is worth the Present Value of its expected future cash flows. In a DCF, you divide the valuation into two periods. During the forecast period, assumptions change while in the terminal period assumptions stay the same. You then project the cash flows and bring both the FCF and terminal value back to present value by discounting them, usually by the WACC. Walk me though a Discounted Cash Flow Analysis...

what is value what people are willing to pay for (what the buyer pays) who said, "Value is what people are willing to pay for" John Naisbitt Brainpower Read More Previous Play Next Rewind 10 seconds Move forward 10 seconds Unmute 0:08 / 0:15 Full screen 2 primary types of valuation 1. relative valuation 2. intrinsic valuation relative valuation refers to what methods that compare the price of a company to the market value of similar assets intrins...

DISCOUNTED CASH FLOW MODEL QUESTIONS AND CORRECT VERIFIED ANSWERS LATEST UPDATE A DCF values a company based on: - ANSWER-The present value of its cash flows and the present value of its terminal value. Walk me through a DCF - ANSWER-First, you project out the company's financials using assumptions for revenue growth, expenses and working capital. Then you get FCF for each year which you sum up and discount to a NPV based on your discount rate, usually the WACC. Then you ...

How to calculate WACC? WACC= Cost of Equity * (%Equity) + Cost of Debt * (% Debt) *(1-tax) + Cost of Preferred*(%preferred) How to calculate cost of equity? Cost of equity = Risk-Free Rate + Beta * Equity Risk Premium How to get to Beta in the Cost of Equity Calculation? 1. find Beta for each comparable company, unlever each one, take the media of the set, and lever it based on company's capital structure Unlevered Beta = Levered Beta / (1+((1-Tax Rate)*(Total Debt/Equity))) Levered Beta = U...

REE3043 EXAM 5 QUESTIONS WITH CERTIFIED ANSWERS Based on your understanding of the differences between levered and unlevered cash flows, which of the following is an example of a levered cash flow? A. net operating income B. net sale proceeds C. sale price D. before-tax cash flow - Answer-D Given the following information, calculate the before-tax equity reversion (BTER): NOI: $89,100; annual debt service: $58,444; net sale proceeds: $974,700; remaining mortgage balance: $631,026. ...

BEC524 Individual Assignment (DETAILED ANSWERS) 2023 - DUE: 5 October 2023 100% TRUSTED workings, explanations and solutions. For assistance call or us on +/ 2/ 5/ 4 /7 /7 /9 /5 /4 /0 /1 /3 /2 . Question 1 (30 Marks) You have been called upon to advise a client with regard to an investment of R100 000 in shares in the industrial sector of the JSE. You have gathered data and assigned probabilities to expected returns under four possible market conditions. The following probabilities have ...

_______ leverage will ________ expected return when the investor's rate of return WITHOUT leverage exceeds the cost of debt - increased, increase -as long as each borrowed dollar is earning a greater return than it cost, the net difference goes to the owner, enhancing the equity return -also increases risk "Commercial" Mortgage Loans vs. Home Loans - commercial aren't as standardized, documents are longer and more complex, often no personal liability *Note, these are the same assumpti...