The net operating profit after taxes (NOPAT), total net operating capital (OpCap), free cash flow (FCF), growth rate in FCF, and return on invested capital (ROIC) for the next 3 years and FCF growth rate for Year 3 and the way it compares with the growth rate in sales and ROIC for Year 3 and the way it compare with the WACC 15%.

Question

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Answer 1

Question

Chapter 7, Problem 23SP

a)

Summary Introduction

To determine: The net operating profit after taxes (NOPAT), total net operating capital (OpCap), free cash flow (FCF), growth rate in FCF, and return on invested capital (ROIC) for the next 3 years and FCF growth rate for Year 3 and the way it compares with the growth rate in sales and ROIC for Year 3 and the way it compare with the WACC 15%.

b)

Summary Introduction

To discuss: The value of operations at Year 3 and current value of operations and compare the value of operations at Year 0 with total net operating working capital at Year 3 and explain its relationship.

c)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change.

d)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

e)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

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Answer 2

Question

Chapter 7, Problem 23SP

a)

Summary Introduction

To determine: The net operating profit after taxes (NOPAT), total net operating capital (OpCap), free cash flow (FCF), growth rate in FCF, and return on invested capital (ROIC) for the next 3 years and FCF growth rate for Year 3 and the way it compares with the growth rate in sales and ROIC for Year 3 and the way it compare with the WACC 15%.

b)

Summary Introduction

To discuss: The value of operations at Year 3 and current value of operations and compare the value of operations at Year 0 with total net operating working capital at Year 3 and explain its relationship.

c)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change.

d)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

e)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

Expert Solution & Answer

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Answer 3

Question

Chapter 7, Problem 23SP

a)

Summary Introduction

To determine: The net operating profit after taxes (NOPAT), total net operating capital (OpCap), free cash flow (FCF), growth rate in FCF, and return on invested capital (ROIC) for the next 3 years and FCF growth rate for Year 3 and the way it compares with the growth rate in sales and ROIC for Year 3 and the way it compare with the WACC 15%.

b)

Summary Introduction

To discuss: The value of operations at Year 3 and current value of operations and compare the value of operations at Year 0 with total net operating working capital at Year 3 and explain its relationship.

c)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change.

d)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

e)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

Expert Solution & Answer

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Answer 4

Question

Chapter 7, Problem 23SP

a)

Summary Introduction

To determine: The net operating profit after taxes (NOPAT), total net operating capital (OpCap), free cash flow (FCF), growth rate in FCF, and return on invested capital (ROIC) for the next 3 years and FCF growth rate for Year 3 and the way it compares with the growth rate in sales and ROIC for Year 3 and the way it compare with the WACC 15%.

b)

Summary Introduction

To discuss: The value of operations at Year 3 and current value of operations and compare the value of operations at Year 0 with total net operating working capital at Year 3 and explain its relationship.

c)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change.

d)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

e)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

Expert Solution & Answer

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Answer 5

Chapter 7, Problem 23SP

a)

Summary Introduction

To determine: The net operating profit after taxes (NOPAT), total net operating capital (OpCap), free cash flow (FCF), growth rate in FCF, and return on invested capital (ROIC) for the next 3 years and FCF growth rate for Year 3 and the way it compares with the growth rate in sales and ROIC for Year 3 and the way it compare with the WACC 15%.

b)

Summary Introduction

To discuss: The value of operations at Year 3 and current value of operations and compare the value of operations at Year 0 with total net operating working capital at Year 3 and explain its relationship.

c)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change.

d)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

e)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

Answer 6

Chapter 7, Problem 23SP

a)

Summary Introduction

To determine: The net operating profit after taxes (NOPAT), total net operating capital (OpCap), free cash flow (FCF), growth rate in FCF, and return on invested capital (ROIC) for the next 3 years and FCF growth rate for Year 3 and the way it compares with the growth rate in sales and ROIC for Year 3 and the way it compare with the WACC 15%.

Answer 7

Chapter 7, Problem 23SP

a)

Summary Introduction

To determine: The net operating profit after taxes (NOPAT), total net operating capital (OpCap), free cash flow (FCF), growth rate in FCF, and return on invested capital (ROIC) for the next 3 years and FCF growth rate for Year 3 and the way it compares with the growth rate in sales and ROIC for Year 3 and the way it compare with the WACC 15%.

Answer 8

b)

Summary Introduction

To discuss: The value of operations at Year 3 and current value of operations and compare the value of operations at Year 0 with total net operating working capital at Year 3 and explain its relationship.

Answer 9

b)

Summary Introduction

To discuss: The value of operations at Year 3 and current value of operations and compare the value of operations at Year 0 with total net operating working capital at Year 3 and explain its relationship.

Answer 10

c)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change.

Answer 11

c)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change.

Answer 12

d)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

Answer 13

d)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

Answer 14

e)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

Answer 15

e)

Summary Introduction

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

Answer 16

Expert Solution & Answer

Answer 17

Expert Solution & Answer

Answer 18

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Answer 19

Ch. 7 - Two investors are evaluating General Electric’s...Ch. 7 - A bond that pays interest forever and has no...Ch. 7 - Explain how to use the free cash flow valuation...Ch. 7 - EMC Corporations current free cash flow is 400,000...Ch. 7 - Thress Industries just paid a dividend of $1.50 a...Ch. 7 - Boehm Incorporated is expected to pay a 1.50 per...Ch. 7 - Woidtke Manufacturing’s stock currently sells for...Ch. 7 - A company currently pays a dividend of $2 per...Ch. 7 - Nick’s Enchiladas has preferred stock outstanding...Ch. 7 - Kendra Enterprises has never paid a dividend. Free...

Solution Summary: The author compares the value of operations at Year 3 and the current value at 807.119. The growth in sales after year 1 is 7%, but the ROIC is lower than the WACC.

To discuss: The value of operations at Year 3 and current value of operations and compare the value of operations at Year 0 with total net operating working capital at Year 3 and explain its relationship.

To discuss: The new value of operations and whether it raises or declines and the reason for its change.

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

To discuss: The new value of operations and whether it raises or declines and the reason for its change if the CRR reduced to 60%.

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Chapter 7 Solutions