Find the value of XYZ Co's equity share by using free cash flow to firm (FCFF)...
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Find the value of XYZ Co's equity share by using free cash flow to firm (FCFF) approach with the help of following information. SOURCES OF FUNDS 2020- 2021 Shareholders' funds Equity share capital (12 120 crore shares of Rs.10 each) Reserves and Surplus 10% Loan 280 600 1,000 APPLICATION OF FUNDS Gross fixed assets Less: accumulated depreciation Net fixed assets Net working capital 2020- 2021 1,100 400 700 300 1,000 The EBIT of XYZ for 2020-2021 is Rs.250 crore. Depreciation for the year is Rs. 70crore The company is subject to 40% tax rate. The growth in sales, depreciation NOPAT (net operating profit after tax), gross fixed assets and net working capital will be 18% for the first three years, 10% for the next two years and 7% thereafter. There will be no change in the tax rate and present debt ratio. The expected rate of return of equity shareholders is 16%. Find the value of XYZ Co's equity share by using free cash flow to firm (FCFF) approach with the help of following information. SOURCES OF FUNDS 2020- 2021 Shareholders' funds Equity share capital (12 120 crore shares of Rs.10 each) Reserves and Surplus 10% Loan 280 600 1,000 APPLICATION OF FUNDS Gross fixed assets Less: accumulated depreciation Net fixed assets Net working capital 2020- 2021 1,100 400 700 300 1,000 The EBIT of XYZ for 2020-2021 is Rs.250 crore. Depreciation for the year is Rs. 70crore The company is subject to 40% tax rate. The growth in sales, depreciation NOPAT (net operating profit after tax), gross fixed assets and net working capital will be 18% for the first three years, 10% for the next two years and 7% thereafter. There will be no change in the tax rate and present debt ratio. The expected rate of return of equity shareholders is 16%.
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Calculation of the FCFF for each year FCFF EBIT 1 Tax Rate Depreciation Change in Working Capital Ca... View the full answer
Related Book For
Fundamentals Of Corporate Finance
ISBN: 9780135811603
5th Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
Posted Date:
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