A.) Assume that future free cash flow will grow at 4% per year and their cost of capital is 14%, and estimate the fair market value (i.e., the enterprise value) as of year-end 2017. Enterprise value = ?
B.) Estimate the firm’s stock price, if there are 100 shares outstanding. Stock price = ?
Homework Answers
Cash flow from firm or Free Cash flow from Firm = Operating cash flow - Change in Net Working Capital - Net Capital Spending
- Operating cash flow = EBIT(1-Tax rate) + Depreciation
Tax Rate = taxes/taxable Income = $192/$480 =40%
Operating cash flow of 2017 = $500(1-40%) + $ 70
= $ 370
- Change in Net Working Capital of 2017 = Change in Inventory - Change in accounts receivables- Change in accounts payable
= $ 60 - $ 30- $ 20
= $ 10
- Net Capital Spending of 2017 = Capital Expenditure = $ 250
Free Cash Flow of 2017 = $ 370 - $ 10 - $ 250
= $ 110
Calculating the fair market value of Enterprise Value:
Enterprise Value 
where, Growth rate of Future FCF = 4%
Kc = 14%
EV 
Enterprise Value = $ 1144
B). Enterprise Value = Market Capitalization + Debt - Cash & Cash Equivalent
$ 1144 = Market capitalization + ($150 + $250) - $ 100
Market capitalization = $ 844
Market Capitalization = Stock Price*No of Shares
$ 844 = Stock Price*100
Stock Price = $ 8.44
Add Answer to:
A.) Assume that future free cash flow will grow at 4% per year
and their cost...
Assume that future free cash flow will grow at 4% per year and their cost of...
Assume that future free cash flow will grow at 4% per year and
their cost of capital is 14%, and estimate the fair market value
(i.e., the enterprise value) as of year-end 2017. Enterprise value
= ?
Estimate the firm’s stock price, if there are 100 shares
outstanding. Stock price = ?
Can you please show me how you got to the final answer in
Excel?
Here are the recent financial statements for Lynn Industries: 2017 Income Statement Sales 2,000...
Here are the recent financial statements for Snyder Foods: 2017 Income Statement Sales 2,000 COGS 1,500...
Here are the recent financial statements for Snyder Foods: 2017 Income Statement Sales 2,000 COGS 1,500 EBIT 500 Interest expense 20 Taxable income 480 Taxes 192 Net Income 288 2017 Balance Sheet Cash 100 Accounts payable 150 Accounts receivable 70 Total current liabilities 150 Inventory 130 Total current assets 300 Long-term debt 250 Common stock 100 Fixed assets 700 Retained earnings 500 Total stockholders equity 600 Total 1000 Total 1000 2017 Statement of Cash Flows Operating activities: Net Income 288...
Free cash flow? Given the information above what is the amount of free cash flow for...
Free cash flow?
Given the information above what is the amount of free cash flow
for the company for the year?
Please provide formula/equations?
BUS 7013 - Managerial Accounting Cash Flow Statement Amount Calculations - Chapter 14 End of year Beginning of year Current year Change Income statement Balance sheet Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment, at cost Less: Accum. depreciation Net equipment Total assets 86,000 112,000 141,000 18,000 357,000 298,000 (100,000) 198,000 555,000 54,000 126,000...
Check my work Exercise 12-1 Indirect: Cash flow classification LO C1 points The following transactions and...
Check my work Exercise 12-1 Indirect: Cash flow classification LO C1 points The following transactions and events occurred during the year. Assuming that this company uses the indirect method to report cash provided by operating activities, indicate where each item would appear on its statement of cash flows by placing an X in the appropriate columns) (More than one column may be used.) Statement of Cash Flows Operating Activities Investing Activities Noncash Investing & Financing Activities Not Reported on Statement...
Spreadsheet for Statement of Cash Flows Year Ended December 31, 2018 Transaction Analysis Balance Balance 12/31/2017 Pa...
Spreadsheet for Statement of Cash Flows Year Ended December 31, 2018 Transaction Analysis Balance Balance 12/31/2017 Panel A Balance Sheet: DEBIT CREDIT 12/31/2018 Cash Accounts Receivable 15,300 4,330 14,600 (500) 33,730 19,800 5,330 16,300 (700) Plant Assets 1,700 Accumulated Depreciation 40,730 Total Assets Accounts Payable 6,700 5,400 Common Stock, no par 5,300 28,130 22,830 4,200 33,730 5,500 Retained Earnings 7,200 40,730 Total Liabilities and Stockholders' Equity Panel B_Statement of Cash Flows: 200 Cash Flows from Operating Activities: Net Income Adjustments...
SOURCES AND USES FOR HOME DEPOT 2017: Beginning Cash 2,538 HOME DEPOT Income Statement Revenue Cost...
SOURCES AND USES FOR HOME DEPOT 2017:
Beginning Cash 2,538 HOME DEPOT Income Statement Revenue Cost of Revenue Gross Profit Operating expenses Depreciation expense Earnings Before Interest & Tax Non-operating Inc(Expn) Interest Earnings Before Tax Income Tax Expense Net Income CY 2017 100,904 66,548 34,356 17,613 2,062 14,681 74 Cash Flow - Operating Activities Net Income Depreciation Change in: Accts Receivable Inventory Other Curr Assets Accts Payable Other Curr Liabs Subtotal - CF Operating 1,057 13,698 5,068 8,630 Balance Sheet...
Complete the cash flow from Operating Activities Additions to Net Income Decrease in accounts receivable Decrease...
Complete the cash flow from Operating Activities
Additions to Net Income Decrease in accounts receivable Decrease in inventory Decrease in prepaid assets Increase in accounts payable Increase in accrued liabilities Deductions from Net Income Increase in accounts receivable Increase in inventory Increase in prepaid assets Decrease in accounts payable Decrease in accrued liabilities 450 $300 Cash Flow From Operating Activities Net Income $110 Net Cash Provided by Operating Activities 2011 80 115 Cash Flows From Investing Activities Income Statement For...
please correct 5. A company began a year with Cash of SK. These items increased by...
please correct
5. A company began a year with Cash of SK. These items increased by the amounts displayed during the calendar year: Inventories, S72; Accumulated depreciation, $20: Accounts receivable, $8, Accounts payable, $2; Notes payable, $8; purchases of Fixed assets, $80; Common stock, $25. Net income is $34. There were no changes in long-term debt and no earnings were distributed to stockholders. Complete the following Statement of Cash Flows: Cash Flows from Operating Activities Net income 34 Depreciation 10...
Blossom Company Statement of Cash Flows-Indirect Method For the Year Ended December 31, 2017 Cash flows...
Blossom Company Statement of Cash Flows-Indirect Method For the Year Ended December 31, 2017 Cash flows from operating activities Net income $86,081 Adjustments to reconcile net income to net cash provided by operating activities Depreciation expense Decrease in accounts receivable Increase in inventory Decrease in accounts payable Loss on disposal of plant assets $13,277 13,861 (7,295) (3,210) 4,815 21,448 Net cash provided by operating activities Cash flows from investing activities Sale of investments Purchase of equipment 107,529 4,523 35,308) Net...
S. A company began a year with Cash of $80. These items increased by the amounts...
S. A company began a year with Cash of $80. These items increased by the amounts displayed during the calendar year: Accounts receivable, $35: Inventories, $85; Property and oquapenen $330: Accumulated depreciation, $100. Accounts payable, $30; Notes payable, so Complete the following Statement of Cash Flows S50; retained Net income Accounts Receivable Accounts Payable Notes payable (other current liabilities) Deferred income taxes Total adjustments Net cash flow from operating activities Proceeds from the sale of assets Capital expenditures Net cash...
Assume that future free cash flow will grow at 4% per year and
their cost of capital is 14%, and estimate the fair market value
(i.e., the enterprise value) as of year-end 2017. Enterprise value
= ?
Estimate the firm’s stock price, if there are 100 shares
outstanding. Stock price = ?
Can you please show me how you got to the final answer in
Excel?
Here are the recent financial statements for Lynn Industries: 2017 Income Statement Sales 2,000...
Free cash flow?
Given the information above what is the amount of free cash flow
for the company for the year?
Please provide formula/equations?
BUS 7013 - Managerial Accounting Cash Flow Statement Amount Calculations - Chapter 14 End of year Beginning of year Current year Change Income statement Balance sheet Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment, at cost Less: Accum. depreciation Net equipment Total assets 86,000 112,000 141,000 18,000 357,000 298,000 (100,000) 198,000 555,000 54,000 126,000...
Check my work Exercise 12-1 Indirect: Cash flow classification LO C1 points The following transactions and events occurred during the year. Assuming that this company uses the indirect method to report cash provided by operating activities, indicate where each item would appear on its statement of cash flows by placing an X in the appropriate columns) (More than one column may be used.) Statement of Cash Flows Operating Activities Investing Activities Noncash Investing & Financing Activities Not Reported on Statement...
Spreadsheet for Statement of Cash Flows Year Ended December 31, 2018 Transaction Analysis Balance Balance 12/31/2017 Panel A Balance Sheet: DEBIT CREDIT 12/31/2018 Cash Accounts Receivable 15,300 4,330 14,600 (500) 33,730 19,800 5,330 16,300 (700) Plant Assets 1,700 Accumulated Depreciation 40,730 Total Assets Accounts Payable 6,700 5,400 Common Stock, no par 5,300 28,130 22,830 4,200 33,730 5,500 Retained Earnings 7,200 40,730 Total Liabilities and Stockholders' Equity Panel B_Statement of Cash Flows: 200 Cash Flows from Operating Activities: Net Income Adjustments...
SOURCES AND USES FOR HOME DEPOT 2017:
Beginning Cash 2,538 HOME DEPOT Income Statement Revenue Cost of Revenue Gross Profit Operating expenses Depreciation expense Earnings Before Interest & Tax Non-operating Inc(Expn) Interest Earnings Before Tax Income Tax Expense Net Income CY 2017 100,904 66,548 34,356 17,613 2,062 14,681 74 Cash Flow - Operating Activities Net Income Depreciation Change in: Accts Receivable Inventory Other Curr Assets Accts Payable Other Curr Liabs Subtotal - CF Operating 1,057 13,698 5,068 8,630 Balance Sheet...
Complete the cash flow from Operating Activities
Additions to Net Income Decrease in accounts receivable Decrease in inventory Decrease in prepaid assets Increase in accounts payable Increase in accrued liabilities Deductions from Net Income Increase in accounts receivable Increase in inventory Increase in prepaid assets Decrease in accounts payable Decrease in accrued liabilities 450 $300 Cash Flow From Operating Activities Net Income $110 Net Cash Provided by Operating Activities 2011 80 115 Cash Flows From Investing Activities Income Statement For...
please correct
5. A company began a year with Cash of SK. These items increased by the amounts displayed during the calendar year: Inventories, S72; Accumulated depreciation, $20: Accounts receivable, $8, Accounts payable, $2; Notes payable, $8; purchases of Fixed assets, $80; Common stock, $25. Net income is $34. There were no changes in long-term debt and no earnings were distributed to stockholders. Complete the following Statement of Cash Flows: Cash Flows from Operating Activities Net income 34 Depreciation 10...
Blossom Company Statement of Cash Flows-Indirect Method For the Year Ended December 31, 2017 Cash flows from operating activities Net income $86,081 Adjustments to reconcile net income to net cash provided by operating activities Depreciation expense Decrease in accounts receivable Increase in inventory Decrease in accounts payable Loss on disposal of plant assets $13,277 13,861 (7,295) (3,210) 4,815 21,448 Net cash provided by operating activities Cash flows from investing activities Sale of investments Purchase of equipment 107,529 4,523 35,308) Net...
S. A company began a year with Cash of $80. These items increased by the amounts displayed during the calendar year: Accounts receivable, $35: Inventories, $85; Property and oquapenen $330: Accumulated depreciation, $100. Accounts payable, $30; Notes payable, so Complete the following Statement of Cash Flows S50; retained Net income Accounts Receivable Accounts Payable Notes payable (other current liabilities) Deferred income taxes Total adjustments Net cash flow from operating activities Proceeds from the sale of assets Capital expenditures Net cash...
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