PINGHUA 2014 and 2015 Partial Balance Sheets
Assets								Liabilities and Owners Equity
		2014			2015					2014			2015
Current assets	$	1,850		$	2,100			Current liabilities	$	740		$	860
Net fixed assets		7,850			9,120			Long-term debt		4,000			4,300
								Equity		4,960			6,060

PINGHUA 2015 Income Statement Info
Sales	$	11,300
Costs		5,500
Depreciation		1,000
Interest paid		200

The tax rate is 35%. Long term debt trades at 112% of par. The firm has 500 shares outstanding. Free Cash Flow to the Firm and the Free Cash Flow to Equity are both expected to grow at 2% forever. The weighted average cost of capital is 16%. The cost of equity is 24%.

1.What is the Net Income for 2015? $______

Hint: Construct the Income Stmt using the partial info. You are almost there, you just have to compute the taxable income and subtract the income tax.

2.

What is the Free Cash Flow to the Firm for 2015? $______

Hint: FCFF = ? = EBIT-Tax+D-chgNWC-Capex where Capex=chgNFA+D

3.

What is the Value of the Firm (Assets)? $______

Hint: FCFF / (WACC -g)

4.

What is the stock price per share using the discounted FCFF valuation? $______

Hint: Take the previous answer, subtract the market value of Debt, that will produce the value of the Equity. Then divide by the number of shares.

5.

What is the Free Cash Flow to Equity for 2015? $______

Hint: The easiest way is FCFE = FCFF - interest + chgDebt or follow the original FCFE equation.

6.

What is the stock price per share using the discounted FCFE valuation? $______

Hint: FCFE / (RE - g) gives you the value of Equity, then divide by the number of shares.