Question: Consider the information provided in the following table. Using the additional information provided at the bottom, calculate the value of the firm using FCFF method.
- Consider the information provided in the following table. Using the additional information provided at the bottom, calculate the value of the firm using FCFF method. [15]
| Year | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| Total Assets | 10000 |
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| Fixed Assets | 8000 |
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| Current assets | 2000 |
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| Debt | 4000 |
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| Equity | 5000 |
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| Current liabilities | 1000 |
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| Sales | 15000 |
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| Operating expenses | 12000 |
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| EBIT | 3000 |
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| Int | 400 |
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| PBT | 2600 |
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| Tax(25%) | 650 |
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| PAT | 1950 |
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- For first five years, growth rate is sales in 5% and from sixth year onwards it is 3%
- The asset turnover ratio remains constant
- The total debt to total asset ratio remains constant
- The depreciation rate is 25% and is already included in the operating expenses
- The ratio of operating expenses to sales remains constant
- The ratio of fixed assets to total assets remains constant
- The cost of capital for this firm is 15%
- The current ratio remains constant
- If you feel that some information is not provided, make some assumptions and write your assumptions in bold letters
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