Homework Help is Here – Start Your Trial Now!
Business
Finance
You are considering a geographic expansion into the European market for Canopy Pharmaceuticals. Below are the incremental cash flows for the Canopy project for you to use in your analysis. Assume Canopy's marginal tax rate is 35%, their cost of capital is 15.7 % and an expected growth rate of 5% after 2003. 1998 1999 2000 2001 2002 2003 Net Sales 8,500 15,000 35,500 13,900 46,000 52,000 20,000 60,000 Cost of Sales 3,100 5,500 18,000 24,400 Depreciation 100 100 100 100 100 100 7,200 6,500 3,500 5,410 6,400 7,800 SGGA 5,300 1,100 700 5,400 7,000 R&D 2,800 4,100 EBIT 1,190 20,700 11,000 17,200 _6,020 18,200 6,370 11,830 Income Tax (35%) 417 774 245 3,850 7,150 1.245 455 Net Eamings Depreciation Operating Cash Flows 11,180 13,455 Net PPE (906) (2,030) (1394) (780) (900) (2457) (800) (1267) (300) (738) (200) (912) Working Capital Terminal Value Free Cash Flows

You are considering a geographic expansion into the European market for Canopy Pharmaceuticals. Below are the incremental cash flows for the Canopy project for you to use in your analysis. Assume Canopy's marginal tax rate is 35%, their cost of capital is 15.7 % and an expected growth rate of 5% after 2003. 1998 1999 2000 2001 2002 2003 Net Sales 8,500 15,000 35,500 13,900 46,000 52,000 20,000 60,000 Cost of Sales 3,100 5,500 18,000 24,400 Depreciation 100 100 100 100 100 100 7,200 6,500 3,500 5,410 6,400 7,800 SGGA 5,300 1,100 700 5,400 7,000 R&D 2,800 4,100 EBIT 1,190 20,700 11,000 17,200 _6,020 18,200 6,370 11,830 Income Tax (35%) 417 774 245 3,850 7,150 1.245 455 Net Eamings Depreciation Operating Cash Flows 11,180 13,455 Net PPE (906) (2,030) (1394) (780) (900) (2457) (800) (1267) (300) (738) (200) (912) Working Capital Terminal Value Free Cash Flows

Essentials Of Investments
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
See similar textbooks
icon
Related questions
Question
  1. Calculate the free cash flows for 1998 – 2003.
You are considering a geographic expansion into the European market for Canopy Pharmaceuticals. Below are the incremental cash flows for the Canopy project for you to use in your analysis. Assume Canopy's marginal tax rate is 35%, their cost of capital is 15.7 % and an expected growth rate of 5% after 2003. 1998 1999 2000 2001 2002 2003 Net Sales 8,500 15,000 35,500 13,900 46,000 52,000 20,000 60,000 Cost of Sales 3,100 5,500 18,000 24,400 Depreciation 100 100 100 100 100 100 7,200 6,500 3,500 5,410 6,400 7,800 SGGA 5,300 1,100 700 5,400 7,000 R&D 2,800 4,100 EBIT 1,190 20,700 11,000 17,200 _6,020 18,200 6,370 11,830 Income Tax (35%) 417 774 245 3,850 7,150 1.245 455 Net Eamings Depreciation Operating Cash Flows 11,180 13,455 Net PPE (906) (2,030) (1394) (780) (900) (2457) (800) (1267) (300) (738) (200) (912) Working Capital Terminal Value Free Cash Flows
Transcribed Image Text:You are considering a geographic expansion into the European market for Canopy Pharmaceuticals. Below are the incremental cash flows for the Canopy project for you to use in your analysis. Assume Canopy's marginal tax rate is 35%, their cost of capital is 15.7 % and an expected growth rate of 5% after 2003. 1998 1999 2000 2001 2002 2003 Net Sales 8,500 15,000 35,500 13,900 46,000 52,000 20,000 60,000 Cost of Sales 3,100 5,500 18,000 24,400 Depreciation 100 100 100 100 100 100 7,200 6,500 3,500 5,410 6,400 7,800 SGGA 5,300 1,100 700 5,400 7,000 R&D 2,800 4,100 EBIT 1,190 20,700 11,000 17,200 _6,020 18,200 6,370 11,830 Income Tax (35%) 417 774 245 3,850 7,150 1.245 455 Net Eamings Depreciation Operating Cash Flows 11,180 13,455 Net PPE (906) (2,030) (1394) (780) (900) (2457) (800) (1267) (300) (738) (200) (912) Working Capital Terminal Value Free Cash Flows
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 2 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Cash Flow Statement Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS