Question
Please answer for me asap xo Question 9. (Part a, b, c and d) (10 marks) You are asked to project Value Co (Value)s free
Please answer for me asap xo
Question 9. (Part a, b, c and d) (10 marks) You are asked to project Value Co (Value)s free cash flows (to the firm) over the next 10 years. Values sales this year (year 0) was $240 and its cost of goods sold was $120. Values sales are expected to be $250 next year which will increase by 10% each year thereafter. Values cost of goods sold is expected to stay constant at 50% of sales. Values EBIT margin is expected to stay constant at 40%. Values existing net plant, property, and equipment is $100 and will be depreciated to zero in 8 years, using the straight-line method. Value will spend 20% of its revenues for each year as capital expenditures. The capital expenditures will be depreciated to zero in 8 years, using the straight-line method. Values capital expenditures for any particular year are made at the start of that year. Values working capital consists of accounts receivables, inventories, and accounts payables. Values current (year 0) accounts receivables is $30, inventory is $10, and accounts payable is $25. Values days sales outstanding, days inventory held, and days payable outstanding is expected to remain constant in the future. The days sales outstanding, days inventory held, and days payable outstanding of a particular year are calculated based only on that years account receivables, inventories, account payables, sales and cost of goods sold. Values company tax rate is 30%.
(a) What is Values expected after-tax EBIT for the next 10 years? Answer based only on the information provided. (Show your work in Excel. In Excel, show numbers at the two decimal places. Copy-paste your Excel work to your answer document as an image.) (1 mark)
(b) What is Values expected capital expenditures and depreciation for the next 10 years? Answer based only on the information provided. (Show your work in Excel. In Excel, show numbers at the two decimal places. Copy-paste your Excel work to your answer document as an image.) (4 marks)
(c) What is Values expected increase in net working capital for the next 10 years? Answer based only on the information provided. (Show your work in Excel. In Excel, show numbers at the two decimal places. Copy-paste your Excel work to your answer document as an image.) (4 marks)
(d) What is Values expected free cash flow (to the firm) for the next 10 years? Answer based only on the information provided. (Show your work in Excel. In Excel, show numbers at the two decimal places. Copy-paste your Excel work to your answer document as an image.) (1 mark)
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