Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. Please use the following information to calculate Free Cash Flow of Marcus LLC. The initial sales of year 0 is 100 million. Sales growth

image text in transcribed

1. Please use the following information to calculate Free Cash Flow of Marcus LLC. The initial sales of year 0 is 100 million. Sales growth rate is 20% for the first year and 15% for the second year. The cost of sales and related fees are 50% of the sales. The depreciation value is 5 million each year. Marcus LLC will invest additional 6 million in fixed asset in year 1 and 5 million in year 2. Tax rate is 21%. a. What is the free cash flow for year 1 and year 2?(Hint: calculate EBIT first) b. Do you think it is necessary for a firm to use derivatives? c. What are the benefits and costs of using derivatives

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The New CFO Financial Leadership Manual

Authors: Steven M. Bragg

3rd Edition

0470882565, 978-0470882566

More Books

Students also viewed these Finance questions