Booth's fixed assets were used to only 50% of capacity during 2016, but its current assets were at their proper levels in relation to sales. All assets except fixed assets must increase at the same rate as sales, and fixed assets would also have to increase at the same rate if the current excess capacity did not exist. Booth's after-tax profit margin is forecasted to be 5% and its payout ratio to be 60%. What is Booth's additional funds needed (AFN) for the coming year?

Booth's fixed assets were used to only 50% of capacity during 2016, but its current assets were at their proper levels in relation to sales. All assets except fixed assets must increase at the same rate as sales, and fixed assets would also have to increase at the same rate if the current excess capacity did not exist. Booth's after-tax profit margin is forecasted to be 5% and its payout ratio to be 60%. What is Booth's additional funds needed (AFN) for the coming year?

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

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Assume that today is December 31, 2022, and the following information applies to XavierAirlines:-After-tax operating income [EBIT (1 - T)] for the just ended year is $900 million.-The depreciation expense for the just ended year was $140 million.-The capital expenditure for the just ended year was $225 million.-There was no change in net operating working capital from the previous year.-Analysts estimate that Xavier’s free cash flow is expected to grow on average, at a rate of8% per year for the next 5 years after which growth is expected to moderate to 4% at aconstant rate.-The weighted average cost of capital (WACC) for Xavier is 10%.-The market value of the company's debt is $2.875 billion.-Xavier has 300 million shares of stock are outstanding.Using the corporate valuation model approach, what should be:a. The value of Xavier Airlines today (the firm)?b. The value of Xavier Airlines’ Common Equity?c. The intrinsic value of Xavier’s stock price today?
Fusion Energy Co's earnings before interest and taxes (EBIT) was $275 million. Assuming Fusion Energy's tax rate is 25%, what is their net operating profit after taxes (NOPAT) for 2015 expressed in millions of dollars? Now: In 2015, Fusion Energy spent $30 million on capital expenditures, experienced a decrease in net working capital (including cash) equal to # 70 million, and realized $10 million in depreciation. What is Fusion Energy's unlevered free cash flow for 2015? 393.75 116.25 373.75 256.25
Madison Company has taken a position in its tax return to claim a tax credit of $155 million (direct reduction in taxes payable) and has determined that its sustainability is "more likely than not," based on its technical merits. The tax credit would be a direct reduction in current taxes payable. Madison believes the likelihood that a $155 million, $93 million, or $31 million tax benefit will be sustained is 25%, 30%, and 45%, respectively. Madison's taxable income is $900 million for the year. Its effective tax rate is 25%. What is Madison's income tax expense for the year?
Hughes Corporation is considering a project that would require an investment of $343,000 and would last for 8 years. The incremental annual revenues and expenses generated by the project during those 8 years would be as follows (Ignore income taxes.): Sales Variable expenses Contribution margin Fixed expenses: Salaries Rents Depreciation Total fixed expenses Net operating income $ 227,000 52,000 175,000 O 3.0 years O 5.1 years O 3.2 years O 4.8 years 27,000 41,000 40,000 108,000 $ 67,000 The scrap value of the project's assets at the end of the project would be $23,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to:
a) The Home Design Enterprises is considering a new project which will require RM325,000 for new fixed assets. In the initial year, the project will also require RM160,000 for additional inventory and RM35,000 for additional accounts receivable. Short-term debt is expected to increase by RM100,000 and long-term debt is expected to increase by RM300,000. The project has a 5-year life. The fixed assets will be depreciated straight-line to a zero-book value over the life of the project. At the end of the project, the fixed assets can be sold for 25% of their original cost. The net of balor expected to generate annual sales of RM554,000 and costs of RM430,000. The tax working capital returns to its original level at the end of the project. project is Hoota rate is 35% and the required rate of return is 15%. Calculate: The (exham S) i. the initial cost of this project? eriT bricii vib 16 iii. Set civ. (ex the after-tax operating cash flow for year 1 to year 4? 100 serk the cash flow for…
A new project is expected to generate $906,152 in revenues, $352,538 in cash operating expenses, and depreciation expense of $166,547 in each year of its 8-year life. The corporation's tax rate is 34%. The project will require an increase in net working capital of $89,880 at the outset and a decrease in net working capital of $70,745 in year 8. What is the operating free cash flow from the project in the first year, to the nearest dollar?
The 2021 income statement for Duffy's Pest Control shows that depreciation expense was $203 million, EBIT was $516 million, and the tax rate was 35 percent. At the beginning of the year, the balance of gross fixed assets was $1,586 million and net operating working capital was $423 million. At the end of the year, gross fixed assets was $1,839 million. Duffy's free cash flow for the year was $429 million. Calculate the end-of-year balance for net operating working capital. (Enter your answer in millions of dollars rounded to 1 decimal place.) Net operating working capital million
The Fritz Co. is considering a new project and asked the chief accountant to review potential changes to the net working capital accounts should the project be adopted. The accountant’s report is as follows: Current Projected Inventory $ 99,218 $ 75,000 Accounts receivable $ 89,430 $110,000 Accounts payable $ 58,640 $ 50,000 What amount should be included in the initial cash flow of the project for net working capital?
An after-tax cash flow analysis produced the data below for the year 2013. Determine the after-tax cash flow for 2013? Before-Tax-and-Loan = $23,000 Loan Principal Payment = $3,203 Loan Interest Payment = $3,878 Depreciation Deduction = $12,490 Taxable Income = $6,633 Taxes Due = $1,658 [enter your answer as a whole number, with no dollar sign or comma] 17,465
You are given the following information about a corporation. • The project will require an initial investment of $30,000 in 2019 that will be depreciated over a three-year period towards a zero-salvage value using straight-line depreciation. • The sales and costs in 2020 are $30,000 and $10,000, respectively. • The firm estimates that additional earnings before depreciation, interest and taxes (EBDIT) will grow at a rate of 5% per year over the next two years. • You estimate that this new project will need net working capital equals to $2,000 at the start of the project and after that it will be calculated on the basis of 10% of EBDIT each year. • The firm faces a 15% tax rate, Calculate the project’s annual free cash flow (FCF) for each year (2019, 2020, 2021 and 2022).
Munabhai
For 2020, Electro Tech Inc. has reported earnings before interest and taxes (ebit) of $6.5 million; capital expenditures of $1.2 million; and depreciation of $0.7 million. Net working capital for 2020 is $1.0 million and for 2019 is $0.7 million. The tax rate for Electro Tech is 35%. Calculate Electro Tech’s free cash flow

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