xf 8% J K L D E F G H 29 (use this growth rate in calculation of terminal value and in parte) 15% 9% 45% 35% Sales growth rate (2023/24, 2024/25) Current assets/Sales Current liabilities/Sales Net fixed assets/Sales Costs of goods sold/Sales Depreciation rate Interest rate on debt 1 Interest paid on cash and marketable sec 2 Tax rate 3 Dividend payout ratio 10% 8.50% 2.00% 40% 10% 2020 2021 2022 2023 2024 2025 $3,500 15 Year 16 Income statement (mil. US$) 17 Sales 18 Costs of goods sold 19 Interest payments on debt 20 Interest earned on cash and marketable sec. 21 Depreciation 22 Profit before tax 23 Taxes 24 Profit after tax (net income) 25 Dividends 26 Retained earnings (193) 28 Balance sheet (mil. USS) 29 Cash and marketable securities 30 Current assets 31 Fixed assets 32 At cost 33 Accumulated Depreciation 34 Net foed assets 35 Total assets 36 37 Current liabilities 38 Debt 39 Stock 40 Accumulated retained earnings 41 Total liabilities and equity 2020 2021 2022 2023 2024 2025 52 Year 53 Free cash flow calculation 54 Start with Profit after tax 55 Add back depreciation 56 Subtract increase in current assets 57 Add back increase in current liabilities 58 Subtract increase in fixed assets at cost 59 Add back after-tax interest on debt 60 Subtract after-tax interest on cash and mkt. sec. 61 Free cash flow (mil. US$) 62 63 Valuing the firm 64 Weighted average cost of capital (WACC) 2020 2021 2022 2023 2024 2025 66 Year 67 FCF 68 Terminal value 69 Total 70 71 NPV of row 69 72 Add in initial (year 2020) cash and mkt. sec. 73 Enterprise value 74 Subtract out value of firm's debt today (yr 2020) 75 Equity value (1) All else equal, what is the effect of a decline in tax rate from 40% to 30% on the equity value? For which growth rate the impact of tax rate decrease is most pronounced? Use numbers in the data table to answer this question. (6 points) Tax Rate 30% 35% 0% 82 growth rate of sales for 2024/25 4% 6% 8% 10% 12% 14% 16% 1 Problem 4 2 (Note: You must enable iterative calculations option before viewing the answers to this problemi 3 You have been assigned to forecast and analyse financial statement 4 of Timberland for the 2020-2025 period to gauge fair value of Timberland. The initial information is listed 5 in the yellow cells of the Problem 4.2 sheet. Answer the following questions 7 (a) Complete Balance sheet for this company (5 points) 9 (Show results in the Problem 4.2 sheet) 10 12. (b) Complete Income statement for this company (5 points) 14 (Show results in the Problem 4.2 sheet) 15 16 17 (c.) Derive Free Cash Flows for this company (5 points) 19 (Show results in the Problem 4.2 sheet) 22 (d) Find equity value for this company (4 points) 24 (Show result in cell B75) 26 (e) Complete Data Table (Growth rate vs. Tax Rate) (5 points)