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CR Oil is an integrated oil company. The following...

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CR Oil is an integrated oil company. The following information is taken from its income statements for 2009 and 2010 (all dollar figures are in millions): 2009 Sales: $15,000; cost of goods sold: 50% of sales, depreciation: $500, CAPEX: $400, additional investment in net working capital: $150 2010 Sales: $16,000, cost of goods sold: 55% of sales, depreciation: $580, CAPEX: $250, additional investment in net working capital: $50 Applicable tax rate for the company is 35%. Calculate company?s free cash flows (FCF) for 2009 and 2010 Estimate company?s FCF for 2010-2014 using the following assumptions: Company?s sales will grow at 6% per year over the next five years; Cost of goods sold as a percentage of sales is expected to increase by 1% each year, i.e., the gross margin ratio will be decreasing by 1% every year; Total CAPEX each year is expected to be equal to 25% of additional sales that year (compared to the previous year); Increase in net working capital in a given year will be equal to 5% of additional sales that year (compared to the previous year); Total depreciation each year will be equal to the total depreciation in a prior year plus 20 % of CAPEX incurred in a prior year (for example, depreciation in 2010 was 500 + 20% x 400 = 580). Since the company is a going concern we need not be concerned about the liquidation value of the firm?s assets at the end of 2015. Please put in excel so I can see calulatation to check myself thx

 

Paper#7157 | Written in 18-Jul-2015

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