Question
The Question 1 tab of the spreadsheet contains the most recent (Year 0) income statement for Flitwick Corporation. Youll need to forecast the next 5
The Question 1 tab of the spreadsheet contains the most recent (Year 0) income statement for Flitwick Corporation. Youll need to forecast the next 5 years of the income statement (including the Free Cash Flow) using the following assumptions: Sales will grow by 13% each year. COGS and SG&A will be forecast using the percent of sales technique. Depreciation will grow by 9% each year. Interest expense will grow by 11% each year. Flitwicks tax rate is 31%. CapEx and Change in NWC will grow by 12% each year. At the end of year 5, you will sell the company for $40,000,000 (note: this number should be added to the year 5 free cash flow). The appropriate discount rate is 16%. Once youve estimated the free cash flows, find the value of the firm (i.e. the present value of the free cash flows.)
| Flitwick Corporation | ||||||
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Sales | $ 51,000,000 | |||||
| Cost of Goods Sold | $ 29,500,000 | |||||
| Gross Profit | ||||||
| Selling, General and Administrative Costs | $ 7,800,000 | |||||
| Depreciation | $ 3,300,000 | |||||
| Earnings Before Interest and Tax (EBIT) | ||||||
| Interest Expense | $ 2,100,000 | |||||
| Earnings Before Tax | ||||||
| Taxes (31%) | ||||||
| Net Income | ||||||
| Operating Cash Flow | ||||||
| CapEx | $ 3,250,000 | |||||
| Change in NWC | $ 2,200,000 | |||||
| Free Cash Flow |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started