Use the following information for numbers 23 to 25:Corporate Valuators, Inc. is assessing the value of two companies, Capital Corp. and Earm, Inc. which projects the followingnet cash flows in the next five years, with its desired required rate of return. Net cash flows approximate to be its earningsalso. The balance sheet of Capital Corp. and Eam, Inc. has recorded Property, Plant and Equipment of P100 million andP200 million, respectively. Operating assets are estimated at 80% and 70% respectively and the rest are considered idle.Capital Corp.8,000,0008,800,0009,680,00010,648,00011,712,800Required return 8%Net cash flows Net cash flowsEarn, Inc.9,600,00010,560,00011,616,00012,777,00014,055,36%Year123423. Using capitalization of earnings, compute for the equity value of Capital Corp.24. Using capitalization of earnings, compute for the equity value of Eam, Inc.25. Which company has higher equity value?

Given information : Year Capital corp Earn inc. 1 8000000 9600000 2 8800000 10560000 3…

tively. Operating assets are estimated at 80% and 70% respecti et cash flows Net cash flows apital Corp. 000,000 800,000 680,000 0,648,000 1,712,800 Earn, Inc. 9,600,000 10,560,000 11,616,000 12,777,000 14,055,360 6%

tively. Operating assets are estimated at 80% and 70% respecti et cash flows Net cash flows apital Corp. 000,000 800,000 680,000 0,648,000 1,712,800 Earn, Inc. 9,600,000 10,560,000 11,616,000 12,777,000 14,055,360 6%

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter11: The Statement Of Cash Flows

Section: Chapter Questions

Problem 11MCQ: Chasse Building Supply Inc. reported net cash provided by operating activities of $243,000, capital...

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