Find attached the balance sheet and income statement for
DeeMoney Inc., a large US entertainment firm. In addition to these
financial statements, you are given the following information.
DeeMoneyâ€™s cost of equity is 15% and its cost of debt is 9% (on a
pre-tax basis). The weight of equity in the capital structure is
62.05% and the weight of debt in the capital structure is 37.95%.
Answer the following questions:
(a)Â What is DeeMoneyâ€™s NOPAT in 2015?
(b)Â What is DeeMoneyâ€™s total operating capital in 2015? In 2014?
(c)Â What is DeeMoneyâ€™s investment in operating capital in 2015?
(d)Â What is DeeMoneyâ€™s free cash flow (to the firm) in 2015?
(e)Â What is DeeMoneyâ€™s cost of capital?
(f)Â Assuming that this cash flow will grow at a constant rate of 5% forever, what is DeeMoneyâ€™s total enterprise value?
(g)Â What is DeeMoneyâ€™s firm value?
(h)Â What is DeeMoneyâ€™s equity value per share, if there are 10 million shares outstanding?
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