Question
In: Finance
Bay Properties is considering starting a commercial real estate division. It has prepared the following four-year...
Bay Properties is considering starting a commercial real estate division. It has prepared the following four-year forecast of free cash flows for this division:
|
Year 1 |
Year 2 |
Year 3 |
Year 4 |
|
|
Free cash flow |
−$124,000 |
$11,000 |
$98,000 |
$248,000 |
Assume cash flows after year 4 will grow at
3%
per year, forever. If the cost of capital for this division is
14%,
what is the continuation value in year 4 for cash flows after year 4? What is the value today of this division?
What is the continuation value in year 4 for cash flows after year 4?
The continuation value is
$nothing.
(Round to the nearest dollar.)
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Bay Properties is considering starting a commercial real estate division. It has prepared the following? four-year...
Bay Properties is considering starting a commercial real estate
division. It has prepared the following? four-year forecast of free
cash flows for this? division:
Year 1
Year 2
Year 3
Year 4
Free cash flow
?$152,000
$12,000
$84,000
$211,000
Assume cash flows after year 4 will grow at
4%
per? year, forever. If the cost of capital for this division
is
10%?,
what is the continuation value in year 4 for cash flows after
year? 4? What is the value...
Bay Properties is considering starting a commercial real estate division. It has prepared the following four-year...
Bay Properties is considering starting a commercial real estate
division. It has prepared the following four-year forecast of free
cash flows for this division:
year 1
year 2
year 3
year 4
Free Cash Flow
-132,000
15,000
85,000
239,000
Assume cash flows after year 4 will grow at 5 % per year,
forever. If the cost of capital for this division is 8 %,
a. what is the continuation value in year 4 for cash
flows after year 4?
b....
The commercial division of a real estate firm is conducting a regression analysis of the relationship...
The commercial division of a real estate firm is conducting a
regression analysis of the relationship between x, annual
gross rents (in thousands of dollars), and y, selling
price (in thousands of dollars) for apartment buildings. Data were
collected on several properties recently sold and the following
computer output was obtained.
The regression equation is
Y = 20.0 + 7.25 X
Predictor
Coef
SE Coef
T
Constant
20.000
3.2213
6.21
X
7.250
1.3624
5.29
Analysis of Variance
SOURCE
DF
SS...
The commercial division of a real estate firm is conducting a regression analysis of the relationship...
The commercial division of a real estate firm is conducting a
regression analysis of the relationship between x, annual
gross rents (in thousands of dollars), and y, selling
price (in thousands of dollars) for apartment buildings. Data were
collected on several properties recently sold and the following
computer output was obtained.
Analysis of Variance
SOURCE
DF
Adj SS
Regression
1
41587.3
Error
7
Total
8
51984.1
Predictor
Coef
SE Coef
T-Value
Constant
20.000
3.2213
6.21
X
7.210
1.3626
5.29
Regression...
The commercial division of a real estate firm is conducting a regression analysis of the relationship...
The commercial division of a real estate firm is conducting a
regression analysis of the relationship between x, annual
gross rents (in thousands of dollars), and y, selling
price (in thousands of dollars) for apartment buildings. Data were
collected on several properties recently sold and the following
computer output was obtained.
Analysis of Variance
SOURCE
DF
Adj SS
Regression
1
41587.3
Error
7
Total
8
51984.1
Predictor
Coef
SE Coef
T-Value
Constant
20.000
3.2213
6.21
X
7.210
1.3626
5.29
Regression...
The commercial division of a real estate firm is conducting a regression analysis of the relationship...
The commercial division of a real estate firm is conducting a
regression analysis of the relationship between , annual gross
rents (in thousands of dollars), and , selling price (in thousands
of dollars) for apartment buildings. Data were collected on several
properties recently sold and the following computer output was
obtained.
The regression equation is Y= 20.0 +7.25 X
Predictor
Coef
SE Coef
T
Constant
20.000
3.2213
6.21
X
7.250
1.3625
5.29
Analysis of Variance
SOURCE
DF
SS
Regression
1...
The commercial division of a real estate firm conducted a study to determine the extent of...
The commercial division of a real estate firm conducted a study
to determine the extent of the relationship between annual gross
rents ($1000s) and the selling price ($1000s) for apartment
buildings. Data were collected on several properties sold. The data
is...
df
SS
MS
F
Significance F
Regression
1
41976.4
Residual
7
Total
8
52373.2
Coefficients
Standard Error
t Stat
P-value
Intercept
19
3.2213
6.21
Annual Gross Income
7.75
1.457806668
5.31620562
(a) How many apartments are there?
(b) Write the...
1) Real estate investment trusts may invest in I. commercial properties such as shopping malls. II....
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Real estate investment trusts may invest in
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A.
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