Stiller Corporation financials for the year of 2018 and 2019. Please review the data and follow the instruction: Table 7 Stiller Corporation Comparative Balance Sheet (2018-2019) in USD#TEXT201920181Cash$157,000$78,0002Accounts Receivable180,000185,0003Investments52,00074,0004Equipment298,000240,0005Less Accumulated depreciation(106,000)(89,000)6Current liabilities134,000151,0007Common Stock160,000160,0008Retained Earnings287,000177,000 Additional information: Investments were sold at a loss (not extraordinary) of $7,000; no equipment was sold; cash dividends paid were $50,000, and net income was $160,000.Prepare a statement of cash flows for 2019 for Stiller Corporation.Calculate the company’s free cash flow.Assuming the 2019 cash flows grow at the rates of 20%, 18%, 15% in 2020, 2021, and 2022 respectively, and then stabilizes at 10% calculate the current value of Stiller Corporation. Assume the company’s weighted average cost of capital is 12%.

Cash flow statement is prepared in accordance to IAS 7. It is a component of financial statements.…

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Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 103.3C

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Stiller Corporation financials for the year of 2018 and 2019. Please review the data and follow the instruction:

Table 7

Stiller Corporation Comparative Balance Sheet (2018-2019) in USD

#	TEXT	2019	2018
1	Cash	$157,000	$78,000
2	Accounts Receivable	180,000	185,000
3	Investments	52,000	74,000
4	Equipment	298,000	240,000
5	Less Accumulated depreciation	(106,000)	(89,000)
6	Current liabilities	134,000	151,000
7	Common Stock	160,000	160,000
8	Retained Earnings	287,000	177,000

Additional information:

Investments were sold at a loss (not extraordinary) of $7,000; no equipment was sold; cash dividends paid were $50,000, and net income was $160,000.

Prepare a statement of cash flows for 2019 for Stiller Corporation.
Calculate the company’s free cash flow.
Assuming the 2019 cash flows grow at the rates of 20%, 18%, 15% in 2020, 2021, and 2022 respectively, and then stabilizes at 10% calculate the current value of Stiller Corporation. Assume the company’s weighted average cost of capital is 12%.

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