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    Enterprise Value, Operating Expense and Capital Expense

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    1.In March 2005, General Electric (GE) had a book value of equity of $113 billion, 10.6 billion shares outstanding, and market price of $36 per share. GE also had cash of $13 billion, and total debt of $370 billion.
    What was GE's Enterprise value? (Points: 1)
    0.97
    3.27
    3.38
    $381.6 billion
    738.6

    2. Suppose a firm's tax rate is 35%.What effect would a $10 million operating expense have on this year's earnings? What effect would it have on next year's earnings?

    3. Suppose a firm's tax rate is 35%.What effect would a $10 million capital expense have on this year's earnings, if the capital is depreciated at a rate of $2 million per year for 5 years? What effect would it have on next year's earnings?

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    https://brainmass.com/business/business-math/enterprise-value-operating-expense-and-capital-expense-244183

    Solution Summary

    This solution explains:

    1) How to calculate the enterpise value of a firm.

    2) What effect operating expenses have on current and next-year earnings.

    3) What effect capital expenses have on current and next-year earnings.

    $2.49

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