Question
You have been asked to examine a valuation done of Loden Construction, a real estate and construction company. You have been provided with the income
You have been asked to examine a valuation done of Loden Construction, a real estate and construction company. You have been provided with the income statement for the last year:
Revenues 1,000
Operating Expenses 723.5
Depr. & Amort. 108.3
= EBIT 207.6
In the valuation, the analyst has assumed a growth rate of 0.07 forever in revenues, operating income and depreciation, and assumed capital expenditures of $ 169.6 million (for next year). In addition, the analyst has assumed that non-cash working capital will be 0.29 of the change in revenues. (Tax rate = 20%) Estimate the expected free cashflows to the firm next year, based upon the assumptions listed above.
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