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You have been asked to review the free cash flow to the firm computation made by an analyst for Stark Stores Inc., a small publicly
You have been asked to review the free cash flow to the firm computation made by an analyst for Stark Stores Inc., a small publicly traded retail company. Estimate the correct Free Cash Flow to the Firm.
Analyst Estimate
Last Year (in millions) | Notes | |
Revenue | $1,200.00 | |
-Operating Expenses | $600.00 | Includes $100 million in operating lease expenses. The firm has $80 million in lease commitments each year for the next 5 years an a pre-tax cost of debt of 5%. |
Operating Income | $600.00 | |
-Interest Expense | $150.00 | |
Taxable Income | $450.00 | |
-Taxes | $157.50 | Paid Marginal Tax Rate on taxable income. |
Net Income | $292.50 | |
+Depreciation | $100.00 | |
-CAPEX | $200.00 | Did not include stock based acquisition of $50 million. |
-Increase in WC | $50.00 | Includes increase in cash balance of $10 million. |
FCFF | $142.50 |
Input your answer in the same number format as the chart above (use 50 for 50 million).
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