Last year, Xxx Yyyyy had $5 million in Operating Income (EBIT). The company had a Net Depreciation Expense of $1 million and an Interest Expense of $1 million; its Corporate Tax Rate was 40%. The company has $14 million in Operating Current Assets and $4 million in Operating Current Liabilities; it has $15 million in Net Plant and Equipment. It estimates that it has an After-Tax Cost of Capital of 10%. Assume that Xxx’s only non-Cash item was Depreciation.A.) Calculate Net Operating Working Capital for the current year. B.) Calculate Total Net Operating Capital for the Current Year.C.) If Total Net Operating Capital in the Previous Year was $24 million, what was the company’s Free Cash Flow (FCF) for the year? Last year, Xxx Ywwy had $5 million in Operating Income (EBIT). The company had a NetDepreciation Expense of $1 million and an Interest Expense of $1 million; its Corporate TaxRate was 40%. The company has $14 million in Operating Current Assets and $4 million inOperating Current Liabilities; it has $15 million in Net Plant and Equipment. It estimates that ithas an After-Tax Cost of Capital of 10%. Assume that Xxx's only non-Cash itenm wasDepreciation.A.) Calculate Net Operating Working Capital for the current year.B.) Calculate Total Net Operating Capital for the Current Year.C.) If Total Net Operating Capital in the Previous Year was $24 million, what was thecompany's Free Cash Flow (FCF) for the year?cessibility: Investigate

Net Operating Working Capital: Such NOWC is the measure of the only current assets directly used in…

Answered: Last year, Xxx Yyyyy had $5 million in…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter2: Financial Statements, Cash Flow, And Taxes

Section: Chapter Questions

Problem 1STP

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Last year, Xxx Yyyyy had $5 million in Operating Income (EBIT). The company had a Net Depreciation Expense of $1 million and an Interest Expense of $1 million; its Corporate Tax Rate was 40%. The company has $14 million in Operating Current Assets and $4 million in Operating Current Liabilities; it has $15 million in Net Plant and Equipment. It estimates that it has an After-Tax Cost of Capital of 10%. Assume that Xxx’s only non-Cash item was Depreciation. A.) Calculate Net Operating Working Capital for the current year. B.) Calculate Total Net Operating Capital for the Current Year. C.) If Total Net Operating Capital in the Previous Year was $24 million, what was the company’s Free Cash Flow (FCF) for the year?

Last year, Xxx Ywwy had $5 million in Operating Income (EBIT). The company had a Net
Depreciation Expense of $1 million and an Interest Expense of $1 million; its Corporate Tax
Rate was 40%. The company has $14 million in Operating Current Assets and $4 million in
Operating Current Liabilities; it has $15 million in Net Plant and Equipment. It estimates that it
has an After-Tax Cost of Capital of 10%. Assume that Xxx's only non-Cash itenm was
Depreciation.
A.) Calculate Net Operating Working Capital for the current year.
B.) Calculate Total Net Operating Capital for the Current Year.
C.) If Total Net Operating Capital in the Previous Year was $24 million, what was the
company's Free Cash Flow (FCF) for the year?
cessibility: Investigate

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