DCF Analysis

The following forecast inputs for Jensen Co. and the income statement forecast for 2021 (only) should be used to answer the questions below.

$000s 2021F 2022F 2023F 2024F

Income Statement:

Net Sales $653,440

Sales Growth N/A 4.1% 2.2% 3.6%

Depreciation 13,555 14,020 14,350 14,600

Operating EBIT 126,767

Operating EBIT Margin 19.40% 19.65% 19.85% 20.20%

Interest Expense 32,672 33,190 33,740 34,320

Taxes (38%) 35,756

Net Income 58,339

Cash Flow Statement:

Capital Expenditures 13,330 13,880 14,225 14,560

Working Capital (Inc./(Dec.) 5,400 (3,500) 5,850 (2,920)

Miscellaneous:

WACC (T=0) 4.60%

Jensen Co. had cash equivalents and debt outstanding of $76,000 and $127,000 (both in $000s), respectively, at December 31, 2020 (Time = 0). Additionally, Jensen Co. had basic shares outstanding of 35.3 million and fully diluted shares outstanding of 48.0 million, as of December 31, 2020 (Time = 0).

(Note: assume a 38% tax rate used on all calculations.)

Using the information in the table above, prepare the free cash flow forecast for 2021 - 2024.