This question is about business valuations and macroeconomic events
How would rising interest rates in the United States, due to increased government spending in 2022 to 2026 that increases the weighted average cost of capital (WACC ), affect business valuations and why holding all else constant? Explain how your answer would change if the company being valued was going to receive revenue from future government spending.
For Green Zebra using the case study from class:
Calculate Green Zebra’s valuation using the attached, pro-forma financial statements and the Weighted Average Cost of Capital (WACC) Valuation Method as of the end of fiscal year 2020;
Provide two reasons the set of comparable companies for Green Zebra (as suggested in the case study were used in the case study (see pages 19-20)? Explain.
Explain how rising interest rates may affect Green Zebra negatively in two ways only.
This question is about financial ratios and net present value.
Using your assigned financial statements (see below), solve for the following financial ratios for each company’s fiscal-year end 2020 as assigned
Apple, Inc.: https://finance.yahoo.com/quote/AAPL/financials?ltr=1 (PMBA)
Explain why the current ratio is potentially important for the wine business versus a technology business like Facebook (Meta).
These questions refer to the in-class and video lectures concerning basic macroeconomics, exchange rates, and macroeconomic data.
Explain what happens to other, key macroeconomic variables (interest rates, investment (I), unemployment, real GDP, spot exchange rate for the dollar) when exchange rates are flexible and domestic monetary policy seeks to increase the money supply (MS ), thus lowering domestic interest rates (idom ). Explain your answer.
Describe the forecast for the Personal Consumption Expenditures (PCE) Price Index, used by the Federal Reserve to monitor inflation, for the United States from 2022 to 2025 according to the data video from class? What two assumptions are driving this forecast? Explain.
For Question 1: Disregard the forecast in the case study on page 17, use only the attached.
Assumptions:
Interest rate on additional debt for Green Zebra = 10.0%
Risk free-rate in 2021 = 1.75%
Definitions:
EBT = Earnings Before Taxes
EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization
COGS = Cost of Goods Sold
GP = Gross Profit
A/R = Accounts Receivable
A/P = Accounts Payable Please, refer to images below
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