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Nano Media is a young, growing social media company that has just reported net income of $10 million for the most recent year, on revenues of $100 million. The company reported capital expenditures (including acquisitions) of $40 million for the most recent year, significantly higher than the depreciation of $12 million for the year. Finally, non-cash working capital was $36 million at the end of the most recent year. Looking forward, the company expects the following for each of these items for the next 3 years: • Revenues will grow 40% a year, capital expenditures at 15% a year and depreciation at 25% a year, each year for the next 3 years. • The table below lists the expectations that the company has for net profit margins (net income as a percent of sales) and non-cash working capital as a percent of sales for the next 3 years: 1 2 3 Net Margin 12% 14% 16% Total non-cash WC as % of revenues 30% 25% 15% a. The company currently has a cash balance of $45 million. How much cash will be left after year 3, if it pays no dividends and does not borrow money? Nano Media is a young, growing social media company that has just reported net income of $10 million for the most recent year, on revenues of $100 million. The company reported capital expenditures (including acquisitions) of $40 million for the most recent year, significantly higher than the depreciation of $12 million for the year. Finally, non-cash working capital was $36 million at the end of the most recent year. Looking forward, the company expects the following for each of these items for the next 3 years: • Revenues will grow 40% a year, capital expenditures at 15% a year and depreciation at 25% a year, each year for the next 3 years. • The table below lists the expectations that the company has for net profit margins (net income as a percent of sales) and non-cash working capital as a percent of sales for the next 3 years: 1 2 3 Net Margin 12% 14% 16% Total non-cash WC as % of revenues 30% 25% 15% a. The company currently has a cash balance of $45 million. How much cash will be left after year 3, if it pays no dividends and does not borrow money?
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To answer this question we need to project the cash flows of Nano Media for the next three years bas... View the full answer
Related Book For
Accounting for Governmental and Nonprofit Entities
ISBN: ?978-0073379609
15th Edition
Authors: Earl R. Wilson, Jacqueline L Reck, Susan C Kattelus
Posted Date:
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