59) During the coming year, Gold & Gold wants to increase its free cash flow by $180 million, which should result in a higher stock price. The CFO has made these projections for the upcoming year: ∙ EBIT is projected to equal $852 million. ∙ Gross capital expenditures are expected to total to $360 million versus depreciation of $120 million, so its net capital expenditures should total $240 million. ∙ The tax rate is 25%. ∙ There will be no changes in cash or marketable securities, nor will there be any changes in notes payable or accruals. What increase in net working capital (in millions of dollars) would enable the firm to meet its target increase in FCF? a. $379 b. $219 c. $263 d. $316 e. $175
59) During the coming year, Gold & Gold wants to increase its free cash flow by $180 million, which should result in a higher stock price. The CFO has made these projections for the upcoming year: ∙ EBIT is projected to equal $852 million. ∙ Gross capital expenditures are expected to total to $360 million versus depreciation of $120 million, so its net capital expenditures should total $240 million. ∙ The tax rate is 25%. ∙ There will be no changes in cash or marketable securities, nor will there be any changes in notes payable or accruals. What increase in net working capital (in millions of dollars) would enable the firm to meet its target increase in FCF? a. $379 b. $219 c. $263 d. $316 e. $175
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
59)
During the coming year, Gold & Gold wants to increase its free cash flow by $180 million, which should result in a higher stock price. The CFO has made these projections for the upcoming year:
|
∙ |
EBIT is projected to equal $852 million. |
|
∙ |
Gross capital expenditures are expected to total to $360 million versus |
|
∙ |
The tax rate is 25%. |
|
∙ |
There will be no changes in cash or marketable securities, nor will there be any changes in notes payable or accruals. |
What increase in net working capital (in millions of dollars) would enable the firm to meet its target increase in FCF?
| a. |
$379
|
|
| b. |
$219
|
|
| c. |
$263
|
|
| d. |
$316
|
|
| e. |
$175
|
63)
If D 1 = $1.50, g (which is constant) = 6.5%, and P 0 = $56, what is the stock's expected capital gains yield for the coming year?
| a. |
6.50%
|
|
| b. |
7.52%
|
|
| c. |
7.90%
|
|
| d. |
7.17%
|
|
| e. |
6.83%
|
64)
Shulman Inc. has the following data, in thousands. Assuming a 365-day year, what is the firm's cash conversion cycle?
| Annual sales = |
$45,000 |
| Annual cost of goods sold = |
$30,000 |
| Inventory = |
$4,500 |
| Accounts receivable = |
$1,800 |
| Accounts payable = |
$2,500 |
| a. |
43 days
|
|
| b. |
32 days
|
|
| c. |
35 days
|
|
| d. |
28 days
|
|
| e. |
39 days
|
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