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BA 731 Take-home Portion of Midterm Exam Solution..




Suppose today is January 1, 2012. Using the financial statements below prepare budgeted financial statements for;2012, 2013, 2014 & 2015. In 2011 dividend payout ratio was 50.36%. Assume that except tax rate all other items in;the financial statements will grow by percentage sales growth. Company's sale revenue is expected to grow at the;rate of 7%. Compute free cash flow (FCF) for all the forecasted years. Assume that FCF is forecasted to grow at 4%;after 2015 forever. The WACC is 10% and there are 10 million shares outstanding.;a. Calculate the value of operations as of today. (5 pts.);b. What is the intrinsic value of the stock price? (10 pts);c. Find the additional fund needed (AFN) for 2012. (5 pts);(Note: You must show forecasted financial statement with the solutions);XYZ INC;Income Statement;2011;Sales;Costs;Depreciation;EBIT;Interest;Earnings Before Taxes;Taxes (At 35%);Net Income;$350.00;$252.00;$26.30;$71.70;$10.60;$61.10;$21.39;$39.72;XYZX INC;Balance Sheet;(In millions);2011;Assets;Cash;Marketable Securities;Accounts Receivable;Inventory;Total Current Assets;Net Plant & Equipment;Total Assets;21.5;33;35;70;159.5;347.4;506.9;2011;Current Liabilities & Equity;Accounts Payable;Accruals;Notes Payable;Total Current Liabilities;Long-Term Debt;Preferred stock;Common Stock;Retained Earnings;Total Liab. and Owners' Equity;6.3;18.2;51.2;75.7;125.8;18;223.7;63.7;506.9


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