5:19You are considering an investment in Fields and Struthers, Inc., and want to evaluate the firm's free cash flow. From thstatement, you see that Fields and Struthers earned an EBIT of $84 million, had a tax rate of 21 percent, and its deprewas $10 million. Fields and Struthers's NOPAT gross fixed assets increased by $50 million from 2020 and 2021. The fassets increased by $38 million and spontaneous current liabilities increased by $25 million.Calculate Fields and Struthers's NOPAT operating cash flow for 2021. (Enter your answer in millions of dollars roundplaces.)Answer is complete but not entirely correct.$ 11.60 millionOperating cash flowCalculate Fields and Struthers's NOPAT investment in operating capital for 2021. (Enter your answer in millions of dollaInvestment in operating capitalmillion

Operating cash flows (OCF) is the cash flows generated from normal operations- Selling and producing…

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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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You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its future investments in new plant and working capital: Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation Pretax profit Tax at 30% Investment 1 $ 78 38 40 12 14 Year a. Total value b. Laputa's equity 2 $ 98 48 50 15 17 3 $ 113 53 60 18 20 4 $ 118 58 60 18 22 From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed 40% by equity and 60% by debt. Its cost of equity is 13%, its debt yields 9%, and it pays corporate tax at 30%. a. Estimate the company's total value. Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. b. What is the value of Laputa's equity? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount.
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 $0.7 million. The tax rate for Electro Tech is 35%. Calculate Electro Tech’s free cash flow
The following is a four-year forecast for Torino Marine. Year Free cash flow ($ millions) 2022 -63 a. Fair market value b. Fair market value per share 2023 84 2024 101 a. Estimate the fair market value of Torino Marine at the end of 2021. Assume that after 2025, earnings before interest and tax will remain constant at $200 million, depreciation will equal capital expenditures in each year, and working capital will not change. Torino Marine's weighted-average cost of capital is 9 percent and its tax rate is 20 percent. Note: Do not round intermediate calculations. Enter your answer in millions rounded to 1 decimal place. million 2025 123 b. Estimate the fair market value per share of Torino Marine's equity at the end of 2021 if the company has 48 million shares outstanding and the market value of its interest-bearing liabilities on the valuation date equals $380 million. Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its future investments in new plant and working capital: Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation Pretax profit Tax at 30% Investment 1 $ 75 15 60 18 17 Year a. Total value b. Laputa's equity 2 $ 95 25 70 21 20 3 $ 110 30 80 24 23 4 $ 115 35 80 24 25 From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed 40% by equity and 60% by debt. Its cost of equity is 16%, its debt yields 7%, and it pays corporate tax at 30%. a. Estimate the company's total value. Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. b. What is the value of Laputa's equity? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount.
As a financial analyst, you have been tasked with evaluating Randy Watson Music's free cash flow. Based on the 2022 income statement, EBIT was $41 million, the tax rate was 21 percent, and its depreciation expense was $6 million. NOPAT gross fixed assets increased by $28 million from 2021 and 2022. The company's current assets increased by $18 million and current liabilities increased by $14 million. Calculate the operating cash flow (OCF) for 2022. (Enter your answer in millions of dollars.)
Milton Industries expects free cash flows of $14 million each year. Milton's corporate tax rate is 21%, and its unlevered cost of capital is 14%. Milton also has outstanding debt of $25.57 million, and it expects to maintain this level of debt permanently. a. What is the value of Milton Industries without leverage? b. What is the value of Milton Industries with leverage? a. What is the value of Milton Industries without leverage? The value of Milton Industries without leverage is $ million. (Round to two decimal places.) b. What is the value of Milton Industries with leverage? The value of Milton Industries with leverage is $ million. (Round to two decimal places.)
In 2022, Waystar Royco had sales of $200 billion.. The firm also: Had $140 billion in cash operating expenses. Had $20 billion in depreciation. Paid $10 billion in interest to JP Morgan Chase on an outstanding loan. Invested $15 billion in fixed capital. Paid $10 billion in dividends to its stockholders. Paid Taxes of $6.3 billion What were the firm's free cash flows (FCF) for 2022 in billions of dollars? 38.7Correct 18.7 8.7 -1.3 23.7
For 2021, Gourmet Kitchen Products reported $22 million of sales and $19 million of operating costs (including depreciation). The company has $15 million of total invested capital. Its after-tax cost of capital is 10%, and its federal-plus-state income tax rate was 25%. What was the firm's economic value added (EVA), that is, how much value did management add to stockholders' wealth during 2021?
You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its future investments in new plant and working capital: Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation Pretax profit Tax at 30% Investment 1 $ 73 33 40 12 19 a. Total value b. Laputa's equity Year 2 $93 43 50 15 22 3 $ 108 48 60 18 25 4 $ 113 53 60 18 27 From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed 60% by equity and 40% by debt. Its cost of equity is 18%, its debt yields 9%, and it pays corporate tax at 30%. a. Estimate the company's total value. Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. b. What is the value of Laputa's equity? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount.
Required: The MoMi Corporation's cash flow from operations before interest and taxes was $2.3 million in the year just ended, and it expects that this will grow by 5% per year forever. To make this happen, the firm will have to invest an amount equal to 17% of pretax cash flow each year. The tax rate is 21%. Depreciation was $290,000 in the year just ended and is expected to grow at the same rate as the operating cash flow. The appropriate market capitalization rate for the unleveraged cash flow is 12% per year, and the firm currently has debt of $5 million outstanding. Use the free cash flow approach to calculate the value of the firm and the firm's equity. (Enter your answer in dollars not in millions.) Value of the firm Value of the firm's equity
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. 18.
Assume that today is December 31, 2021, and that the following information applies to Abner Airlines: ⚫ After-tax operating Income [EBIT(1-T)] for 2022 is expected to be $500 million. The depreciation expense for 2022 is expected to be $160 million. The capital expenditures for 2022 are expected to be $375 million. . No change is expected in net operating working capital. ⚫ The free cash flow is expected to grow at a constant rate of 7% per year. ⚫The required return on equity is 15%. The WACC is 10%. The firm has $204 million of nonoperating assets. ⚫ The market value of the company's debt is $2.885 billion. 190 million shares of stock are outstanding. Using the corporate valuation model approach, what should be the company's stock price today? Do not round intermediate calculations. Round your answer to the nearest cent.

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