Question
Task 3: The company financials are given below: Net income 200m Depreciation expense 72m Interest expense 120m Increase in net working capital investment 32m Increase
Task 3:
The company financials are given below:
| Net income | 200m | |
| Depreciation expense | 72m | |
| Interest expense | 120m | |
| Increase in net working capital investment | 32m | |
| Increase in fixed capital investment | 136m | |
| Market value of debt | 1,440m | |
| Cost of debt | 8.5% | |
| Cost of equity | 14% | |
| Tax rate | 20% | |
| Constant growth rate of free cash flow (forecasted) | 4% (per year) | |
| Capital Structure: | ||
| Debt | 40% | |
| Equity | 60% | |
| Number of shares outstanding | 20,000,000 | |
Find the following:
1. Free cash flow to firm (actual), Free cash flow to firm (next year forecast), Weighted average cost of capital, Value of the company (using FCF capitalization approach), Value of equity and Intrinsic value per share.
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Case Study In Auditing
Authors: Donald H Taylor
1st Edition
0471046264, 978-0471046264
