Enterprise Value, Operating Expense and Capital Expense
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?
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.
... the operating expense section based on the average operating expense % (of revenue ... Interest- Market EBIT EBITDA Net Bearing Value as of Enterprise EV/Reven ...
... 18 Sophia Sweeny, the president of Sweeny Enterprises, is considering ... life of four years and no salvage value. ... Sweeny Enterprise's cost of capital is 8 percent ...
Casey King Enterprises entered into two noncancelable leases for ... as operating expense and the operating lease does ... as a capital lease, the present value of the ...
... maximum price per share Han Solo Enterprises should be ... debt has a fair market value of $550 ... and administrative 328 279 Other operating expense (income), net ...
... except that pre-tax cash operating expense $200,000 per ... a result of reductions in overhead expenses (largely because ... What is Solar Siding's Enterprise Value (EV ...
... Price to Earnings Enterprise Value EBITDA multiple D ... CALCULATIONS ALL VALUES IN $MILLIONS Dec-09 A ... Gross Profits Less: Operating Expenses excluding depreciation ...
... outstanding) Less: Cash and equivalents Equals: Enterprise value. b. ... Statement and Balance Sheet values are in ... 2,334,000 Others 11,830 - - Operating income or ...
... 94600 Repurchase of property by BG Enterprises 5900 Net ...Operating Cash Flows US domestic revenue Price per ... Royalty and Concentrate profit net) Price per case ...
