Question

How do I answer this question? develop the concept of CFFA (Cash Flows from Assets) for a publicly traded corporation. Assume this corporation: (a) plows-back 25% of its net income into the firm for reinvestment and (b) has a marginal tax rate of 35%. Create Balance Sheets and Income Statement and then calculate the annual Cash Flow from Assets (aka: CFFA or Free Cash Flows (FCF)). A constraint, must range between $8,000,000 and $12,000,000 annually. Make sure to highlight the cash flow identity, i.e. calculate

Answer 1

Solution : - Güven that i Income ($8,000,000 + 19,000,000)/2. Arouge Income = 10,000,000. Ley: Tank @ 35% = 3,500,000. (10,000,000 -3.500,000) Net Income -6,500,000. : 6,500,000 plouged back profut Heyors to Amount of Income Reversed back to busineay aporations 1:25°) x 6,500,000 -1,625,000 profit Available for share holding : =(6.500,000 - 1,605,000 ) 2 $,875,000 Amount received per Share : 5$ 4,875,000 / 2,500,000 1,95 Alseme the comparition = 2,500,000 s is the cock share lie Lill earn 1095