Question 10

Gatton Corporation experienced a pre-tax income of $110 in 2021. In the same time period, their interest expense was $20. On December 31^st, 2021 their accountant noted the following changes in their balance sheet accounts from the year prior: accounts receivable increased $5, inventory increased $10, Goodwill decreased $6, accounts payable decreased $7, and PPE jumped net $15 (including $5 of depreciation expense). During the year, the company paid a 20% tax rate.

Calculate NOPAT. No need for $ in answer.

Question 11

Gatton Corporation experienced a pre-tax income of $110 in 2021. In the same time period, their interest expense was $20. On December 31^st, 2021 their accountant noted the following changes in their balance sheet accounts from the year prior: accounts receivable increased $5, inventory increased $10, Goodwill decreased $6, accounts payable decreased $7, and PPE jumped net $15 (including $5 of depreciation expense). During the year, the company paid a 20% tax rate.

Calculate FCF. No need for $ in answer.

Question 14

Given the following cash flows and additional information, calculate non-discounted horizon value for the business.

Y1: -$125

Y2: $50

Y3: $77

Y4: $122.

WACC: 9%

Perpetual growth rate 3%

Round answer to nearest whole number. No need for $ in answer.