Homework Answers
| 1- | |||
| Free cash flow | Free Cash Flow to Equity (FCFE) = Net Income - (Capital Expenditures - Depreciation) - (Change in Non-cash Working Capital) + (New Debt Issued - Debt Repayments) | 135-(55-35)-(350-270)+(70-50) | 55 |
| net income | 135 | ||
| working capital in 2018 | (500-150) | 350 | |
| working capital in 2017 | (350-80) | 270 | |
| 2- | |||
| Year | expected FCFE =current FCFE*(1+growth rate) | ||
| 2018 | 55 | ||
| 2019 | 55*1.25^1 | 68.75 | |
| 2020 | 55*1.25^2 | 85.9375 | |
| 2021 | 55*1.25^3 | 107.421875 | |
| 2022 | 107.42*1.1^1 | 118.162 | |
| Terminal value in 2021 | (expected FCFE in 2022)/(required return-growth rate) | 118.162/(15%-10%) | 2363.24 |
| 3- | |||
| Year | cash flow | present value of cash flow at 15% =cash flow/(1+r)^n r =15% | |
| 2019 | 68.75 | 68.75/1.15^1 | 59.7826087 |
| 2020 | 85.9375 | 85.9375/1.15^2 | 64.98109641 |
| 2021 | 107.421875 | 107.42/1.15^3 | 70.63039369 |
| 2021 | 2363.24 | 2636.24/1.15^3 | 1733.370593 |
| present value of free cash flow to equity | 1928.764691 | ||
| present value per share | 1928.76/100 | 19.29 |
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2. American Bank The following table lists the Income statement and Balance sheet for First Income...
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balance sheet and income statement (McDonalds 2017-2018)
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the following:
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and quick ratio (assuming the corporate tax rate is 35%). Show your
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b) Comment on the trends of these ratios.
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balance sheet and income statement (McDonalds 2017-2018)
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Using the following income statement and balance sheet answer
the following:
a) For the years 2017, 2018, and 2019 calculate the after-tax
operating income, ROA, days in inventory, times interest earned,
and quick ratio (assuming the corporate tax rate is 35%). Show your
work.
b) Comment on the trends of these ratios.
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