The following table presents a four-year forecast for Kenmore Air, Inc.:
-Estimate the fair market value of Kenmore Air's equity per share at the end of 2012 under the following assumptions:
a.EBIT in year 2016 is $200 million,and then grows at 5 percent per year forever.
b.To support the perpetual growth in EBIT,capital expenditures in year 2017 exceed depreciation by $30 million,and this difference grows 5 percent per year forever.
c.Similarly,working capital investments are $15 million in 2017,and this amount grows 5 percent per year forever.
Definitions:
Total Power
In an electrical circuit, the combined measure of both active (real) and reactive power, expressed in watts for DC circuits and volt-amperes for AC circuits.
Sum
The result of adding two or more numbers or quantities together.
Reciprocal Formula
A mathematical expression used to calculate the reciprocal of a number, which is the inverse or 1 divided by that number.
Parallel Resistors
Resistors connected in such a way that there is more than one path for current to flow, affecting the total resistance of the circuit.
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