Grove Inc. is a publicly traded chemical company that reported the following financial statements for the most recent year. Income Statement: Most recent year (in $ millions) Revenues $1000 - Operating Expenses (includes $150 million in depreciation) EBIT $250 - Interest Expense $50 Taxable Income $200 - Taxes $60 Net Income $140 Balance Sheet: Start of Year Cash: $- Other Current Assets $1000 Fixed Assets $1250 Total Assets $2,250 Current Liabilities $500 Debt $250 Equity $1500 Total Liabilities $2250 Assuming that this company will maintain its existing after-tax return on capital next year and that it expects operating income to grow 6% over the year, estimate the expected free cash flow to the firm next year. (The company's effective tax rate this year is not expected to change next year). A. $58.30 B. $74.20 C. $90.10 D. $153.70 E. $265.00
Grove Inc. is a publicly traded chemical company that reported the following financial statements for the most recent year.
Income Statement: Most recent year (in $ millions)
Revenues $1000
- Operating Expenses (includes $150 million in
EBIT $250
- Interest Expense $50
Taxable Income $200
- Taxes $60
Net Income $140
Cash: $-
Other Current Assets $1000
Fixed Assets $1250
Total Assets $2,250
Current Liabilities $500
Debt $250
Equity $1500
Total Liabilities $2250
Assuming that this company will maintain its existing after-tax return on capital next year and that it expects operating income to grow 6% over the year, estimate the expected
A. $58.30
B. $74.20
C. $90.10
D. $153.70
E. $265.00
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