Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
10th Edition
ISBN: 9781337902571
Author: Eugene F. Brigham, Joel F. Houston
Publisher: Cengage Learning
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Textbook Question
Chapter 16, Problem 3P
AFN EQUATION Refer to Problem 16-1 and assume that the company had $3 million in assets at the end of 2019. However, now assume that the company pays no dividends. Under these assumptions, what additional funds would be needed for the coming year? Why is this AFN different from the one you found in Problem 16-1?
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Question 7 During 2019, Bitsincoins Corporation had EBIT of $100,000, a change in net fixed assets of $400,000, an increase in net current assets of $100,000, an increase in spontaneous current liabilities of $400,000, a depreciation expense of $50,000, and a tax rate of 30%. Based on this information, what is Bitsincoin’s free cash flow?
FREE CASH FLOW Arlington Corporation’s financial statements (dollars and shares are in millions) are provided here.
a. What was net operating working capital for 2018 and 2019?Assume that all cash is excess cash; i.e., this cash is not needed foroperating purposes.b. What was Arlington's 2019 free cash flow?c. Construct Arlington's 2019 statement of stockholders' equity.d. What was Arlington's 2019 EVA? Assume that its after-tax cost ofcapital is 10%.e. What was Arlington's MVA at year-end 2019? Assume that itsstock price at December 31, 2019 was $25.
a) Calculate the free cash flow generated by a firm which has earnings before interest and taxes of £30m, has depreciated its fixed assets by £1m, has invested £10m in new fixed assets and £5m in working capital during 2019 when it paid corporate tax at 20%. Explain what you have assumed about the firm’s asset base.
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(b) During 2019 the firm in (a) generated revenue of ÂŁ60m, its cost of goods sold was ÂŁ20m and its selling, general and administrative costs were ÂŁ10m. You anticipate that over the next five years revenue will grow at 5% each year, the cost of goods sold will continue to be a fixed percentage of revenue, but due to managerial efficiencies administrative costs will not change. All forms of investment, together with depreciation will have a consistent relationship with revenue. At the end of this five-year period you believe that free cash flow will grow at 2% each year. What is the company worth at the end of 2019, assuming that its weighted average cost of capital is 5%?
Chapter 16 Solutions
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
Ch. 16 - Prob. 1QCh. 16 - Assume that an average firm in the office supply...Ch. 16 - Would you agree that computerized corporate...Ch. 16 - Certain liability and net worth items generally...Ch. 16 - Suppose a firm makes the following policy changes....Ch. 16 - AFN EQUATION Carlsbad Corporations sales are...Ch. 16 - AFN EQUATION Refer to Problem 16-1. What...Ch. 16 - AFN EQUATION Refer to Problem 16-1 and assume that...Ch. 16 - PRO FORMA INCOME STATEMENT Austin Grocers recently...Ch. 16 - EXCESS CAPACITY Williamson Industries has 7...
Ch. 16 - Prob. 6PCh. 16 - PRO FORMA INCOME STATEMENT At the end of last...Ch. 16 - LONG-TERM FINANCING NEEDED At year-end 2019, total...Ch. 16 - SALES INCREASE Paladin Furnishings generated 4...Ch. 16 - REGRESSION AND RECEIVABLES Edwards Industries has...Ch. 16 - REGRESSION AND INVENTORIES Charlies Cycles Inc....Ch. 16 - Prob. 12PCh. 16 - ADDITIONAL FUNDS NEEDED Morrissey Technologies...Ch. 16 - EXCESS CAPACITY Krogh Lumbers 2019 financial...Ch. 16 - Prob. 1TCLCh. 16 - FORECASTING THE FUTURE PERFORMANCE OF ABERCROMBIE ...
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