I have 3 questions: Now lets put everything together and try to calculate the (projected) FCF of the firm LuluYoga for 2018. Here is some financial information you have gathered with the help of your intern peers and supervisors at the investment bank. The analyst team has been talking to the management of LuluYoga and they estimate that sales are going to grow by 5% from 2017 to 2018. Financial ratios that will allow you to compute the different component of FCF are in the table. Use the historical 3-year average for all financial ratios as your estimate of the financial ratio in 2018, with two exceptions: ARDOH and APDOH. You talked to senior managers of the firm and are very confident that in 2018 AR/DOH will be 45 and AP DOH will be 20. The corporate tax rate is 35%

2015 2016 2017 2018 (projected) Sales 4,000,000 6,000,000 9,000,000 - COGS/Sales 60.20% 60.60% 60.40% - OpExp/Sales 23.00% 22.80% 22.60% - AR/DOH 29 35 36 45 Inv DOH 45 44 46 - NFATO 13 13.5 13.2 - AP DOH - - 20 20 Initial inventory 196,877 1.

1. Calculate the projected COGS in year 2018 2.

2. What is the change in NOWC?

1,572,756

313,776

293,622

3. Calcute the FCF for 2018