Hi again, I have some more questions for you Additional Requirements Level of Detail: Show all work.


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Hi again, I have some more questions for you Additional Requirements Level of Detail: Show all work. 1 answer below » Hi again, I have some more questions for you Additional Requirements Level of Detail: Show all work Other Requirements: Please answer the second attachment in excel. Thank you Document Preview: Select the best answer regarding how we can determine the value of a profitable firm that plans to continue operations indefinitely.
We determine the net value of the assets the firm currently has by looking at the Balance Sheet = Assets – Liabilities.
We assume that all assets & View complete question » Hi again, I have some more questions for you Additional Requirements Level of Detail: Show all work Other Requirements: Please answer the second attachment in excel. Thank you Document Preview: Select the best answer regarding how we can determine the value of a profitable firm that plans to continue operations indefinitely.
We determine the net value of the assets the firm currently has by looking at the Balance Sheet = Assets – Liabilities.
We assume that all assets & liabilities on the Balance Sheet will eventually disappear [i.e. we give them zero value] & instead estimate the future free cash flows the assets will deliver & calculate their present value.
We can look at the amount of Invested Capital = value owned by Investors [Debt, Preferred Stock, & Common Stock] shown on the Balance Sheet.
Which is the least accurate description of policies that firm managers can set up and control?
Capital Structure Policy selects the types of funding sources [Investor/Investment types = Debt, Preferred Stock, and Common Stock] and sets the weights or amounts of capital acquired from the funding sources in order to minimize WACC
Dividend Policy sets the amount of Dividends the firm will pay out to Investors based on different possible formulas such as absolute amounts or relative amounts based on percentages of income earned by the firm
Investment Policy selects the types of investments that cash not needed for operations will be invested in [‘Short-Term Investments’] such as commercial paper and other safe, interest-bearing investments
Select the most accurate description of the choices when determining the amounts and weights of investments in the firm used to calculate the Weighted Average Cost of Capital ‘WACC’.
We ideally use the firm’s strategic or target Capital Structure weights to find WACC but if not available we can use Market Value weights or even Book Value weights for bonds and preferred stocks.
We should use the firm’s Book Value (from the Balance Sheet) for the weight of equity but we must always use market value weights for bonds and preferred stocks.
Since firms always publish their strategic or target Capital Structure… Attachments: Q-Attachment…..docx Q-Attachment-….docx View less » Aug 03 2015 10:14 AM

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