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Kim is projecting LTG, Inc.'s cash flows using the percentage of sales method. She projects that the sales and the NOPAT for the next 3
"Kim is projecting LTG, Inc.'s cash flows using the percentage of sales method. She projects that the sales and the NOPAT for the next 3 years will be according to the table below and after that both the sales and the NOPAT will grow at 4% per year forever. Year 0 represents the firm's most recent year. The firm's Net PPE is expected to be at 20% of the same year's sales. The operating NWC is projected at 6% of the same year's sales. What is the value of the firm if the cost of capital is 10%?"
Year | 0 | 1 | 2 | 3 |
Sales | 1397 | 1206 | 1424 | 1125 |
NOPAT | 219 | 226 | 313 | 249 |
3,622 | ||
4,963 | ||
4,135 | ||
3,286 | ||
3,804 |
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