Question
1. Spirialtex Inc., announced aggressive growth plans over the next three years. Below are the expected investments in fixed and working capital and corresponding pro
1. Spirialtex Inc., announced aggressive growth plans over the next three years. Below are the expected investments in fixed and working capital and corresponding pro forma income statements for each of the next 3 years.
Year | 1 | 2 | 3 |
Tax Rate | 40% | 40% | 40% |
Capital Expenditures | 20 | 30 | 40 |
Change in NWC | 5 | 6 | 7 |
Shares Outstanding | 6 | 6 | 6 |
Sales (000,000) | 150 | 200 | 250 |
COGS | 75 | 100 | 125 |
Sales & Administrative Expense | 15 | 20 | 25 |
Depreciation & Amortization | 50 | 51 | 52 |
Total Operating Costs | 140 | 171 | 202 |
Operating Income (EBIT) | 10 | 29 | 48 |
Earnings Before Taxes | 6 | 24 | 42 |
Taxes | 2.4 | 9.6 | 16.8 |
Net Income | 3.6 | 14.4 | 25.2 |
EPS | 0.6 | 2.4 | 4.2 |
What is the free cash flow to the firm in Year 1?
$100.21
$31.00
$21.00
$18.00
$10.00 2.
Spirialtex Inc., announced aggressive growth plans over the next three years. Below are the expected investments in fixed and working capital and corresponding pro forma income statements for each of the next 3 years.
Year | 1 | 2 | 3 |
Tax Rate | 40% | 40% | 40% |
Capital Expenditures | 20 | 30 | 40 |
Change in NWC | 5 | 6 | 7 |
Shares Outstanding | 6 | 6 | 6 |
Sales (000,000) | 150 | 200 | 250 |
COGS | 75 | 100 | 125 |
Sales & Administrative Expense | 15 | 20 | 25 |
Depreciation & Amortization | 50 | 51 | 52 |
Total Operating Costs | 140 | 171 | 202 |
Operating Income (EBIT) | 10 | 29 | 48 |
Earnings Before Taxes | 6 | 24 | 42 |
Taxes | 2.4 | 9.6 | 16.8 |
Net Income | 3.6 | 14.4 | 25.2 |
EPS | 0.6 | 2.4 | 4.2 |
2. Spirialtex has a corporate cost of capital of 12% and is expected to have a long run growth rate of 4%. What is the horizon value of the firm?
Group of answer choices
$439.40
$309.40
$211.50
$177.11
$125.00
3.
Assuming the firm has no short-term investments, what is the total value of the firm?
Group of answer choices
$350.00
$390.32
$273.77
$418.00
$210.50 4.
Spirialtex has 6 million common shares outstanding and $100 million in debt. What is the current equity value of the firms stock price?
Group of answer choices
$77.21
$85.50
$48.39
$28.96
$90.25
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