11. More on the corporate valuation model

Globo-Chem Co. is expected to generate a free cash flow (FCF) of $8,030.00 million this year (FCF₁ = $8,030.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Globo-Chem Co.’s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Globo-Chem Co.? (Note: Round all intermediate calculations to two decimal places.)

$24,236.54 million

$191,367.44 million

$144,158.09 million

$172,989.71 million

Globo-Chem Co.’s debt has a market value of $108,119 million, and Globo-Chem Co. has no preferred stock. If Globo-Chem Co. has 675 million shares of common stock outstanding, what is Globo-Chem Co.’s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.)

$58.73

$53.39

$160.17

$52.39

Ankh-Sto Associates Co. is expected to generate a free cash flow (FCF) of $7,780.00 million this year (FCF₁ = $7,780.00 million), and the FCF is expected to grow at a rate of 26.20% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 4.26% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Ankh-Sto Associates Co.’s weighted average cost of capital (WACC) is 12.78%, what is the current total firm value of Ankh-Sto Associates Co.? (Note: Round all intermediate calculations to two decimal places.)

$174,882.41 million

$154,748.04 million

$128,956.70 million

$23,255.41 million

Ankh-Sto Associates Co.’s debt has a market value of $96,718 million, and Ankh-Sto Associates Co. has no preferred stock. If Ankh-Sto Associates Co. has 600 million shares of common stock outstanding, what is Ankh-Sto Associates Co.’s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.)

$59.10

$52.73

$161.20

$53.73

The following were selected from among the transactions completed by Babcock Company during November of the current year:

Required:

The following were selected from among the transactions completed by Babcock Company during November of the current year:

Journalize the entries to record the transactions of Babcock Company for November using the periodic inventory system. Refer to the Chart of Accounts for exact wording of account titles.

(27 lines)

The following were selected from among the transactions completed by Babcock Company during November of the current year. Babcock uses the net method under a perpetual inventory system.

Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles.

The following were selected from among the transactions completed by Babcock Company during November of the current year. Babcock uses the net method under a perpetual inventory system.

Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles.

July 1 Purchased merchandise from Boden Company for $6,600 under credit terms of 2/15, n/30, FOB shipping point, invoice dated July 1. 2 Sold merchandise to Creek Co. for $950 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $550. 3 Paid $120 cash for freight charges on the purchase of July 1. 8 Sold merchandise that had cost $1,900 for $2,300 cash. 9 Purchased merchandise from Leight Co. for $2,500 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9. 11 Received a $500 credit memorandum from Leight Co. for the return of part of the merchandise purchased on July 9. 12 Received the balance due from Creek Co. for the invoice dated July 2, net of the discount. 16 Paid the balance due to Boden Company within the discount period. 19 Sold merchandise that cost $1,000 to Art Co. for $1,500 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19. 21 Issued a $250 credit memorandum to Art Co. for an allowance on goods sold on July 19. 24 Paid Leight Co. the balance due after deducting the discount. 30 Received the balance due from Art Co. for the invoice dated July 19, net of discount. 31 Sold merchandise that cost $5,400 to Creek Co. for $7,000 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31.

The following were selected from among the transactions completed by Babcock Company during November of the current year:

Required:

Sales-Related and Purchase-Related Transactions Using Periodic Inventory System

The following were selected from among the transactions completed by Essex Company during July of the current year:

Required:

Journalize the entries to record the transactions of Essex Company for July using the periodic inventory system.

For a compound transaction, if an amount box does not require an entry, leave it blank.