Chapter 3 Exercise Problem 1. Given the information below for the M&G Corporation, derive the firm's dividend payment, net operating profit after taxes, capital expenditures, change in net operating working capital, and free cash flows for year 2018. M&G Corporation Balance Sheet As of 12/31/18 As of 12/31/17 Cash $ 500 $ 9,000 A/R 16,000 12,500 Inventories 45.500 29.000 Total CA $ 62,000 $ 50,500 Gross FA 126,000 90,000 Less: accumulated depreciation 38.000 28.000 Net FA $ 88,000 $ 62,000 Total Assets $150,000 $112,500 Accounts payable $ 18,000 $ 8,500 Accruals 5,000 2,000 Notes payable 46,000 17,000 Total CL $ 69,000 $ 27,500 Long-term debt 22,950 28,750 Common stock 31,500 31,500 Retained earnings 26,550 24.750 Total L&E $150,000 $112,500 M&G Corporation Income Statement 2018 Sales $160,000 Cost of goods sold 96,000 Gross profit $ 64,000 Operating expenses Fixed operating expenses 21,000 Variable operating expenses 16,000 Depreciation 10,000 Total operating expenses $ 47,000 EBIT $ 17,000 Interest expense 6.100 Earnings before taxes $ 10,900 Taxes (25%) 2.725 Net income $ 8,175