1) Using the given information calculate Lan & Chen Technologies Free Cash Flow (FCF) and Return On Invested Capital Ratio (ROIC) in year 2015.

2)Estimate the next four years FCF using 2015 actual data. Assume operating ratios remain unchanged from values in most recent year and sales will grow by 10%, 8%, 5%, and 5% for the next four years.

3)Using the given financial statements calculate AFN for the next year. Assume sales growth rate is 10%. Also, calculate Self-supporting growth rate of the firm.

Lan & Chen Technologies: Income Statements for Year Ending December 31 (Thousands of Dollars) 2015 2014 Sales $945,000 $900,000 Operating costs excluding depreciation and a 812,700 774,000 EBITDA $132,300 $126,000 Depreciation 33,100 31,500 EBIT $99,200 $94,500 Interest Expense 10,470 8,600 EBT $88,730 $85,900 Taxes (40%) 35,492 34,360 Net income $53,238 $51,540 Common dividends Addition to retained earnings $43,300 $9,938 $41,230 $10,310 Lan & Chen Technologies: December 31 Balance Sheets (Thousands of Dollars) Assets 2015 2014 Cash $47,250 $45,000 Short-term investments 3,800 3,600 Accounts Receivable 283,500 270,000 Inventories 141,750 135,000 Total current assets $476,300 $453,600 Net fixed assets 330,750 315,000 Total assets $807,050 $768,600 Liabilities and equity Accounts payable Accruals Notes payable Total current liabilities Long-term debt Total liabilities Common stock Retained Earnings Total common equity Total liabilities and equity $94,500 $90,000 47,250 45,000 26,262 9,000 $168,012 $144,000 94,500 90,000 $262,512 $234,000 444,600 444,600 99,938 90,000 $544,538 $534,600 $807,050 $768,600 Lan & Chen Technologies: Income Statements for Year Ending December 31 (Thousands of Dollars) 2015 2014 Sales $945,000 $900,000 Operating costs excluding depreciation and a 812,700 774,000 EBITDA $132,300 $126,000 Depreciation 33,100 31,500 EBIT $99,200 $94,500 Interest Expense 10,470 8,600 EBT $88,730 $85,900 Taxes (40%) 35,492 34,360 Net income $53,238 $51,540 Common dividends Addition to retained earnings $43,300 $9,938 $41,230 $10,310 Lan & Chen Technologies: December 31 Balance Sheets (Thousands of Dollars) Assets 2015 2014 Cash $47,250 $45,000 Short-term investments 3,800 3,600 Accounts Receivable 283,500 270,000 Inventories 141,750 135,000 Total current assets $476,300 $453,600 Net fixed assets 330,750 315,000 Total assets $807,050 $768,600 Liabilities and equity Accounts payable Accruals Notes payable Total current liabilities Long-term debt Total liabilities Common stock Retained Earnings Total common equity Total liabilities and equity $94,500 $90,000 47,250 45,000 26,262 9,000 $168,012 $144,000 94,500 90,000 $262,512 $234,000 444,600 444,600 99,938 90,000 $544,538 $534,600 $807,050 $768,600