You are considering an investment in National Corporation and want to evaluate the firm's free cash flow. From the income statement, youe see that National Corporation's earned an EBIT of P62,000,000, paid taxes of P17,000,000, and its depreciation expense was P5,000,000. Fixed assets increased by P32,000,000 from 2015 to 2016. The firm's current assets increased by P20,000,000 and spontaneous current liabilities increased by P12,000,000. The National Corporation's free cash flow for 2016 is * Format: 11,111,111
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- You have been asked to value Brilliant Enterprises, a publicly traded IT services firm, and have collected the following information: After-tax operating income last year = $100 million Net income last year = $82.5 million Book value of equity at start of this year = $750 million Book value of debt at start of this year = $250 million Capital expenditure last year = $80 million Depreciation last year = $30 million Increase in non-cash working capital last year = $10 million a) Assuming that Brilliant Enterprises will maintain its return on capital and reinvestment rate from last year for the next 3 years, estimate the free cash flow for the company for each of the next 3 years. b) After year 3, Brilliant expects its growth rate to decline to 3% and the return on capital to be 9% in perpetuity. Assuming that its cost of capital is 8%, estimate the terminal value at the end of the third year. c) Assuming that Brilliant has a cost of capital of 10% for the next 3…You are analysing NBM firm and obtained the following information: FCFF reported as R198 million, interest expense is R15 million. If the tax rate is 35% and the net debt of the firm increased by R20 million, what is the approximate market value of the firm if the FCFE grows at 3% and the cost of equity is 14%? R1,950 billion R2,497 billion R2,585 billion R3,098 billion R 1,893 billionAssume that XYZ, Inc. is a single asset firm that is expected to generate $5 million in net cash flows per year indefinitely. The firm's tax rate is 35%. After satisfying all mandatory obligations, all remaining FCF is distributed to common stockholders in the form of cash dividends. The appropriate cost of equity capital, to ABC, is 14%. The firm's target capital structure includes a mix of debt and common equity and interest paid on debt amounts of $500,000 and this amount is tax deductable. What is the present value of the common equity to the shareholders of XYX corporation? $20,892,857 $2,925,000 $3,925,000 $4,925,000
- Compute the market value of a levered corporation and its cost of capital knowing that the debt ratio is 0.25 and the perpetual EBIT equals 30000 um. Total risk-free debts are in value of 70000 um and the return on debts is 4%. The corporate tax rate is 16%. the return on debts VCORP E Ke WACC ERP FRPNational Co. make these assumptions for valuation purposes:a. The firm consists of a single asset that will generate pretax net cash flows of P3,000,000 per year forever.b. The income tax rate is 25%.c. After making paying taxes, the firm pays dividends to distribute any remaining cash flows to the equity shareholders each year.d. Equity shareholders have financed the asset entirely with P100,000,000 of equity capital.e. The cost of equity capital is 12%.Compute for the value of the firm to the shareholders using dividend discount model?You are working for an imports-exports company. In the current financial year, your company has a net income of $851,000 and plans to use a part of it as retained earnings for a new project which will cost $500,000 next year. The company's stock is currently listed and actively traded on ASX. Required: a) Calculate the amount of net income available for the company to pay dividends to current shareholders if it maintains a capital structure of 46% in debt funding and 54% in equity funding, assuming residual dividend theory applies. b) Your company is going to pay an annual dividend of $5 per share and extra dividend of $2 per share in 4 weeks. The standard process of settlement in ASX is T+2. If tomorrow is the ex-dividend date, when is the record date for dividend payment? calculate the ex-dividend price if today's market price is $43.5, given the dividend tax rate is 13%. c) Your company needs to make a payment of AUD 245,000 to a partner in Tokyo. If the direct…
- The Hastings Sugar Corporation has the following pattern of net income each year, and associated capital expenditure projects. The firm can earn a higher return on the projects than the stockholders could earn if the funds were paid out in the form of dividends. Year Net Income Profitable CapitalExpenditure 1 $ 11 million $ 8 million 2 24 million 11 million 3 9 million 7 million 4 19 million 7 million 5 23 million 8 million The Hastings Corporation has 2 million shares outstanding. (The following questions are separate from each other). If the marginal principle of retained earnings is applied, how much in total cash dividends will be paid over the five years? (Enter your answer in millions.) If the firm simply uses a payout ratio of 40 percent of net income, how much in total cash dividends will be paid? (Enter your answer in millions and round your answer to 1…You are considering an investment in Fields and Struthers, Inc., and want to evaluate the firm's free cash flow. From the income statement, you see that Fields and Struthers earned an EBIT of $70 million, had a tax rate of 21 percent, and its depreciation expense was $7 million. Fields and Struthers's NOPAT gross fixed assets increased by $36 million from 2020 and 2021. The firm's current assets increased by $32 million and spontaneous current liabilities increased by $18 million. Calculate Fields and Struthers's NOPAT operating cash flow for 2021. Calculate Fields and Struthers's NOPAT investment in operating capital for 2021. Calculate Fields and Struthers's NOPAT free cash flow for 2021.You are considering an investment in Fields and Struthers, Inc., and want to evaluate the firm’s free cash flow. From the income statement, you see that Fields and Struthers earned an EBIT of $84 million, had a tax rate of 21 percent, and its depreciation expense was $10 million. Fields and Struthers's NOPAT gross fixed assets increased by $50 million from 2020 and 2021. The firm’s current assets increased by $38 million and spontaneous current liabilities increased by $25 million. Calculate Fields and Struthers’s NOPAT operating cash flow for 2021. (Enter your answer in millions of dollars rounded to 2 decimal places.) Calculate Fields and Struthers’s NOPAT investment in operating capital for 2021. (Enter your answer in millions of dollars.) Calculate Fields and Struthers’s NOPAT free cash flow for 2021. (Enter your answer in millions of dollars rounded to 2 decimal places.)
- The company wants to take a $500.0 mil loan to rebuild its position and expand its line of business to heavy equipment. Should the company take the loan or seek other forms of investment? notes -Business overseas- 40% of company revenues -Domestic market- 60% of company revenues -Increase in competition -The company has over the years relied mainly on issuing long-term bonds to finance its capital projects. -As of today, the firm has 50.0 million shares of common stock outstanding. Ratio Analysis 2021 Est. 2020 2019 Industry Average Liquidity Ratios Current Ratio (times) 2.34 3.22 3.68 4.2 Quick Ratio (times) 0.91 1.24 1.79 2.1 Asset Management Ratios Average sales/day 10.96 8.22 7.81 9 Inventory Turnover Ratio (times) 4.43 3.74 5.06 9 Days Sales Outstanding (days) 38.32 45.62 40.34 36 Fixed Assets Turnover…The Hastings Sugar Corporation has the following pattern of net income each year, and associated capital expenditure projects. The firm can earn a higher return on the projects than the stockholders could earn if the funds were paid out in the form of dividends. Year Net Income Profitable CapitalExpenditure 1 $ 13 million $ 7 million 2 24 million 11 million 3 17 million 6 million 4 18 million 8 million 5 22 million 8 million The Hastings Corporation has 2 million shares outstanding. (The following questions are separate from each other). a. If the marginal principle of retained earnings is applied, how much in total cash dividends will be paid over the five years? (Enter your answer in millions.) b. If the firm simply uses a payout ratio of 50 percent of net income, how much in total cash dividends will be paid? (Enter your answer in millions and round your answer to 1 decimal place.) c. If the firm pays a 10 percent stock…Bakery co. make these assumptions for valuation purposes: a. The firm consists of a single asset that will generate pretax net cash flows of P3,000,000 per year forever. b. The income tax rate is 25%. c. After making paying taxes, the firm pays dividends to distribute any remaining cash flows to the equity shareholders each year. d. Equity shareholders have financed the asset entirely with P100,000,000 of equity capital. e. The cost of equity capital is 12%. 1. Compute for the dividend amount each year to the shareholders. 2. Compute for the dividend amount each year to the shareholders.