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PROBLEM 1 gG ($ figures in $ 000,000) 2009 2010 Sales $240,000 $267,000 Cost of Goods Sold (% of sales) 54% 55% Depreciation $16,000 $17,200 CAPEX $6,000 $6,750 Increase in Net Working Capital $1,200 $1,350 Tax Rate 35% 35% Information for 2010-2014: Sales growth rate next 5 years 4% per year COGS growth rate (as percentage of sales) 1% per year CAPEX 25% of additional sales Change in net working capital 5% of additional sales Depreciation 20% of CAPEX + last year level Tax rate 35% Solution a. FFCF Calculations for 2009-2010 Year 2009 2010 Sales $240,000 $267,000 Cost of Goods Sold Depreciation $(16,000) $(17,200) EBIT EBIT(1-T) = NOPAT Plus: Depreciation Expense $16,000 $17,200 Less: CAPEX $6,000 $6,750 Less: Working Capital Investment $1,200 $1,350 Firm Free Cash Flow b. Estimated FFCF for 2011-2015 Year 2010 2011 2012 2013 2014 2015 Sales $267,000 Cost of Goods Sold Depreciation EBIT EBIT(1-T) = NOPAT Plus: Depreciation Expense Less: CAPEX Less: Working Capital Investment Firm Free Cash Flow

 

Paper#4024 | Written in 18-Jul-2015

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