1. Using the information from the financial statements below and the FCFF and FCFE formulas calculated...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
1. Using the information from the financial statements below and the FCFF and FCFE formulas calculated using net income, estimate the following: 1. FCFF = NI + NCC + Int(1 - Tax rate) - FCInv- WCInv 2. FCFENI+NCC-FCInv-WCInv+ Net borrowing Statement of Income (in Millions, except Per-Share Data) December 31, 2020 $2,215 1.430 Total revenues Operating cost and expenses EBITDA Depreciation EBIT Interest expense Income before tax Taxes (at 40%) Net income Dividends Addition to retained earnings Statement of Cash Flows (in Millions) Operating activities Net income Adjustments Depreciation. Changes in working capital Accounts receivable Inventories Accounts payable Accrued taxes and expenses Cash provided by operating activities Investing activities Purchases of fixed assets. Cash used for investing activities Financing activities Notes payable Long-term financing issuances Common stock dividends Cash used for financing activities Cash and equivalents increase (decrease) Cash and equivalents at beginning of year Cash and equivalents at end of year What is the FCFF? What is the FCFE? 785 180 $40 605 130 475 190 285 90 195 December 31, 2020 $285 180 (39) (44) 22 23 $427 349 $349 $(10) (40) 20 30 210 $248 1. Using the information from the financial statements below and the FCFF and FCFE formulas calculated using net income, estimate the following: 1. FCFF = NI + NCC + Int(1 - Tax rate) - FCInv- WCInv 2. FCFENI+NCC-FCInv-WCInv+ Net borrowing Statement of Income (in Millions, except Per-Share Data) December 31, 2020 $2,215 1.430 Total revenues Operating cost and expenses EBITDA Depreciation EBIT Interest expense Income before tax Taxes (at 40%) Net income Dividends Addition to retained earnings Statement of Cash Flows (in Millions) Operating activities Net income Adjustments Depreciation. Changes in working capital Accounts receivable Inventories Accounts payable Accrued taxes and expenses Cash provided by operating activities Investing activities Purchases of fixed assets. Cash used for investing activities Financing activities Notes payable Long-term financing issuances Common stock dividends Cash used for financing activities Cash and equivalents increase (decrease) Cash and equivalents at beginning of year Cash and equivalents at end of year What is the FCFF? What is the FCFE? 785 180 $40 605 130 475 190 285 90 195 December 31, 2020 $285 180 (39) (44) 22 23 $427 349 $349 $(10) (40) 20 30 210 $248
Expert Answer:
Answer rating: 100% (QA)
ANSWER To calculate the FCFF and FCFE we need to first determine the componen... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Posted Date:
Students also viewed these finance questions
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
The financial statements of Lioi Steel Fabricators are shown below-both the actual results for 2012 and the projections for 2013. Free cash flow is expected to grow at a 6% rate after 2013. The...
-
The most recent financial statements for Retro Machine, Inc., follow. Sales for 2010 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout...
-
Under special case ll in the Routh Hurwitz, we replace the zero row with* Coefficients of the derivative of the auxiliary equation Coefficients of the auxiliary equation Arbitrary small numbers Roots...
-
Wall mass flux for turbulent flow with no chemical reactions use the diffusional analog of Eq. 13.3-7 for turbulent flow in circular tubes, and the Blasius formula for the friction factor, to obtain...
-
Review information about the exams required for earning PMP and CAPM certification. Find and take several sample tests. Document your findings in a one- to two-page paper or short presentation,...
-
Improved computer security measures create their own set of problems: user antagonism, sluggish response time, and hampered performance. Many professionals believe that the most effective way to...
-
Padre works for a trade magazine that publishes. lists of Power-Sizing Exponents (PSE) that reflect economies of scale for developing engineering estimates of various types of equipment. Padre has...
-
Required: A bond with a coupon rate of 8% makes semiannual coupon payments on January 15 and July 15 of each year. The Wall Street Journal reports the ask price for the bond on January 30 at...
-
The Capital-Ideas Company is in its development stage and is deciding how to formally organize its business venture. The founder, Rolf Lee, is considering organizing as either a proprietorship or a...
-
4. Study the convergence of the series In(1+ ) Inn n=2 and In(1+ ) (In n)? n=2
-
Modern Artifacts can produce keepsakes that will be sold for $110 each. Nondepreciation fixed costs are $1,300 per year, and variable costs are $70 per unit. The initial investment of $3,900 will be...
-
Find the (a) approximate true error, (b) relative approximate error, (c) absolute relative approximate error of the following: 1. The derivative of ?(?)=3+2+1 at? = 0.5 when h = 0.005 and h??????? =...
-
Hickory Company manufactures two products-15,000 units of Product Y and 7,000 units of Product Z. The company uses a plantwide overhead rate based on direct labor-hours. It is considering...
-
Q3. Prepare journal entries to record the transactions reflected in items a through g. Information on Kwon Manufacturing's activities for its first month of operations follows: a. Purchased $100,100...
-
Presented below is information related to copyrights owned by Taylor Corporation at December 31, 2020. Carrying amount 7,000,000 Expected future net cash flows6,200,000 Fair value3,300,000 Assume...
-
What does Bill Maurer mean by "Money Ecology", and how does this affect the ways people have developed to make payments? Give and discuss examples that contrast different money ecologies and the...
-
Flicker, Inc., a closely held corporation, acquired a passive activity this year. Gross income from operations of the activity was $160,000. Operating expenses, not including depreciation, were...
-
Error Analysis and Correction. Greer Incorporated discovered the following errors on the books at the beginning of 2015: a. Maintenance expense on account was overstated by $ 20,000 in 2013 and...
-
Crowe Interior Designs of Santa Monica granted 300,000 qualified employee options on June 1 of the current year. The options allow an employee to exchange each option for 36 shares of the companys...
-
Repeat the requirements in P11- 10 assuming that Hein Technologies reports under IFRS. Assume all the conditions to capitalize development costs have been met. What is the difference between the...
-
Assuming that money is worth 10%, compute the present value of 1.\($7,000\) received 15 years from today. 2.The right to inherit \($1,000,000\) 14 years from now. 3.The right to receive \($1,000\) at...
-
Gardner, Inc., plans to finance its expansion by raising the needed investment capital from the following sources in the indicated proportions and respective capital cost rates: Calculate the...
-
For each of the following independent situations, compute the net after-tax cash flow amount by subtracting cash outlays for operating expenses and income taxes from cash revenue. The cash outlay for...
Study smarter with the SolutionInn App