please explain how in year 2006 for example the NET investment =-3.7 when 50.8 * .08 = 4.06

same for NWC = 4.7 when 50.8 * .1 =5.08

what number multiplied together gets 3.7 and 4.7???

Practice Question Kenneth Cole (KCP) had sales of $518 million in 2005. Suppose you expect its sales to grow at a 9% rate in 2006, but that this growth rate will slow by 1% per year to a long-run growth rate for the apparel industry of 4% by 2011. Based on KCP's past profitability and investment needs, you expect EBIT to be 9% of sales, increases in net working capital requirements to be 10% of any increase in sales, and net investment (capital expenditures in excess of depreciation) to be 8% of any increase in sales. If KCP has $100 million in cash, $3 million in debt, 21 million shares outstanding, a tax rate of 37%, and a weighted average cost of capital of 11%, what is your estimate of the value of KCP's stock in early 2006? 22 Solution 2006 2007 2008 2009 2010 2011 Year 2005 FCF Forecast ($ millions) 1 Sales 518.0 2 Growth versus Prior Year 3 EBIT (9% of sales) 4 Less: Income Tax (37% EBIT) 5 Less: Net Investment (8% ASales) 6 Less: Inc. in NWC (10% ASales) 7 Free Cash Flow 564.6 9.0% 50.8 (18.8) (3.7) (4.7) 23.6 609.8 8.0% 54.9 (20.3) (3.6) (4.5) 26.4 652.5 70% 58.7 (21.7) (3.4) (4.3) 29.3 691.6 6.0% 62.2 (23.0) (3.1) (3.9) 32.2 726.2 5.0% 65.4 (24.2) (2.8) (3.5) 35.0 755.3 4.0% 68.0 (25.1) (2.3) (2.9) 37.6