Question 1 i) Calculate the corporate value and equity value for JD by using shareholder...
80.2K
Verified Solution
Link Copied!
Question
Finance
Question 1
i) Calculate the corporate value and equity value for JD by using shareholder value analysis. Data shown below
Sales Growth
15%
per annum
Operating Profit Margin
13%
of sales
Change in CAPEX
12%
of the change in sales
Change in Net Working Capital
10%
of the change in sales
Planning Horizon
5
years
Sales in 2020 were 5,000,000 and face a tax rate of 25%. Risk free rate =3%, market risk premium = 6%, equity beta = 1.5, debt rate = 7%, target capital gearing level of 30% debt in its capital structure, marketable securities = 500,000, debt = 1,750,000.
Assumed that growth will stop after year 5 and there will be no more Capex nor net working capital requirements. Sales growth will be zero and the profit margin and tax rate will remain the same. Assume that the cash flows will continue forever.
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
