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3-7: Free Cash Flow Problem Walk-Through Free Cash Flow Bailey Corporations financial statements (dollars and shares are in millions) are provided here Balance Sheets as of December 31 2014 2013 Assets $14,000 25,000 22,505 $61,505 49,000 $110,505 Cash and equivalents Accounts receivable Inventories $ 11,000 20,000 17,000 $ 48,000 45,000 $93,000 Total current assets Net plant and equipment Total assets Liabilities and Equity Accounts payable Notes payable Accruals 10,500 6,900 7,500 $24,900 10,000 34,900 $9,000 5,100 6,000 $ 20,100 10,000 30,100 Total current liabilities Long-term bonds Total debtCommon stock (5,000 shares) 40,000 35,605 75,605 $110,505 40,000 22,900 62,900 $93,000 Retained earnings Common equity Total assets Income Statement for Year Ending December 31, 2014 $202,000 150,000 52,000 8,000 $ 44,000 7,550 $ 36,450 14,580 s 21,870 9,165 Sales Operating costs excluding depreciation and amortization EBITDA Depreciation & amortization EBIT Interest EBT Taxes (40%) Net income Dividends paid Enter your answers in millions. For example, an answer of $25,000,000,000 should be entered as 25,000 a. What was net operating working capital for 2013 and 2014? 2013 $33000 million 2014 $43505 millionb. What was Baileys 2014 free cash flow? million c. Construct Baileys 2014 statement of stockholders equity Common Stock Retained Total Stockholders Earnings Equity Shares Amount Balances, 12/31/13 million $ milion $ milion $ million 2014 Net Income million Cash Dividends million Addition (Subtraction) to retained earnings million Balances, 12/31/14 mllion $ mllion $ million $ million d, what was Baileys 2014 EVA? Assume that its weighted average cost of capital is 10%. Round your answer to the nearest cent. million e. What was Baileys MVA at year-end 2014? Assume that its stock price at December 31, 2014 was $20 million

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Home nert Page Layout Formulas Data Review View dd-Ins Cut Σ AutoSum ー E ゴWrap Text aCopy B า 프 . Ej- a-Δ. : rーー 逻锂函Merge & Center. $ % , to: conditional Format . Cell Insert Delete Formsat Sort &Find & Format Painter Formatting as Table Styles2 Clear Clipboard Alignment Number Cells Edting 0 34 35 36 37 38 39 40 41 42 43 BAILEY CURRENT ASSETS (CURRENT LIABILITIES NOTES PAYABLE) NET OPERATING WORKING CAPITAL= NET OPERATING WORKING CAPITAL 2013 48000 (20100-5100)- 2014 61505 24900 6900)- 33000 43505 CHANGE IN NET OPERATING WORKING CAPITAL 43505 33000 10505 CAPITAL EXPENDITURE- NET FIXED ASSETS IN 2014 DEPRECIATION FOR 2014 - NET FIXED ASSETS IN 2013 49000 + 8000-45000 12000 FREE CASH FLOW-EBIT(1-t) DEPRECIATION CAPITAL EXPENDITURE - CHANGE IN NET OPERATING WORKING CAPITAL 45 46 47 48 49 44000*(1-0.40) + 8000-12000-10505- 11895 FREE CASH FLOW- 11895 STATEMENT OF SHAREHOLDERS EQUITY RETAINED SHAREHOLDERS EVA MVA LEVERAGED BUY SWAP distress BRIGHAN CAP GAIN 51 COMMON STOCK i1 1 H I ( EV PE EPS DIV ABNORMAL . APV ROSS i deberk ( MARGIN MONEY al tax . PB ROPİ 福 130% 08:01 09-01-2019Home nert Page Layout Formulas Data Review View dd-Ins Cut Σ AutoSum ー E ゴWrap Text aCopy B า 프 . Ej- a-Δ. : rーー 逻锂函Merge & Center. $ % , to: conditional Format . Cell Insert Delete Formsat Sort &Find & Format Painter Formatting as Table Styles2 Clear Clipboard Alignment Number Cells Edting 0 STATEMENT OF SHAREHOLDERS EQUITY 50 51 52 53 COMMON STOCK SHARES AMOUNT RETAINED EARNINGS SHAREHOLDERS EQUITY BALANCE, 12/31/13 2014 NET INCOME CASH DIVIDEND ADDITION TO RETAINED EARNINGS BALANCE, 12/31/14 500040000 22900 21870 9165 62900 56 57 58 59 60 61 62 63 64 65 12705 75605 5000 40000 35605 CALCULATION OF EVA TOTAL INVESTED CAPITAL-NOTES PAYABLE + LONG TERM DEBT + EQUITY TOTAL INVESTED CAPITAL = 6900 + 10000 + 75605 92505 EVA- EBIT(1-t) (TOTAL INVESTED CAPITAL X AFTER TAX COST OF CAPITAL) EVA (44000(1-0.40)) - (92505 x 0.10)- 17149.50 MVA = MVA- (MARKET PRICE X NO OF SHARES OUTSTANDING)-BOOK VALUE OF EQUITY (20 X 5000) - 75605-24395.00 67 i1 1 İ (EV PE EPS DIV ABNORMAL . APV ROSS i deberk ( MARGIN MONEY al tax . PB ROPİ EVA MVA LEVERAGED BUY SWAP distress BRIGHAN CAP GAIN 福 130%

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