FIN 310 Review 2009 50 200 2009 160 160 Cash Accts Receivable Inventory Current Assets 2010 50 Accts Payable 210 Current Liabs 150 500 Debt 150 400 400 2010 210 Revenues 210 Costs Depreciation 420 EBIT interest 600 Taxes 480 Net Income 1,080 Dividends 1,710 Retained Earnings 2010 500 260 120 120 20 35 65 25 40 Net PPE 1,200 1,300 Common & paid in Retained Earnings Equity 1,710 LE 600 440 1,040 1,600 Assets 1,600 Calculate the operating cash flow for 2010. Briefly discuss or interpret it. Calculate the Free Cash Flow From Assets for 2010. Briefly discuss or interpret it. . Year 0 Year 2 Year 3 Year 1 $350 Project CF's -$650 $150 $400 What is the NPV of the above Cash Flow projections given an 8% return? What is the Payback period of the above cash flows? A large industrial company has in recent years on average paid taxes worth 16% of its Earnings Before Taxes, but it is subject the current tax bracket of 21% on every dollar of additional earnings that it generates. The company is only financed with these two financial claims: * 40 million bonds outstanding with $1,000 par value each, 4.2% coupons paid semiannually, 14 years to maturity, high investment grade rating, a quoted yield of 3.3%, and selling currently for 110.0% of par. * 200 million shares of common stock selling for $370 per share with a 0.9 beta and 60% volatility. In financial markets, the current risk-free interest rate is 1%, and equity investors expect a 4% market risk premium over safe investments. Calculate the Weighed Average Cost of Capital for the firm listed above. FIN 310 Review 2009 50 200 2009 160 160 Cash Accts Receivable Inventory Current Assets 2010 50 Accts Payable 210 Current Liabs 150 500 Debt 150 400 400 2010 210 Revenues 210 Costs Depreciation 420 EBIT interest 600 Taxes 480 Net Income 1,080 Dividends 1,710 Retained Earnings 2010 500 260 120 120 20 35 65 25 40 Net PPE 1,200 1,300 Common & paid in Retained Earnings Equity 1,710 LE 600 440 1,040 1,600 Assets 1,600 Calculate the operating cash flow for 2010. Briefly discuss or interpret it. Calculate the Free Cash Flow From Assets for 2010. Briefly discuss or interpret it. . Year 0 Year 2 Year 3 Year 1 $350 Project CF's -$650 $150 $400 What is the NPV of the above Cash Flow projections given an 8% return? What is the Payback period of the above cash flows? A large industrial company has in recent years on average paid taxes worth 16% of its Earnings Before Taxes, but it is subject the current tax bracket of 21% on every dollar of additional earnings that it generates. The company is only financed with these two financial claims: * 40 million bonds outstanding with $1,000 par value each, 4.2% coupons paid semiannually, 14 years to maturity, high investment grade rating, a quoted yield of 3.3%, and selling currently for 110.0% of par. * 200 million shares of common stock selling for $370 per share with a 0.9 beta and 60% volatility. In financial markets, the current risk-free interest rate is 1%, and equity investors expect a 4% market risk premium over safe investments. Calculate the Weighed Average Cost of Capital for the firm listed above
