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In: Finance

Consider the information provided in the following table. Using the additional information provided at the bottom,...

  1. Consider the information provided in the following table. Using the additional information provided at the bottom, calculate the value of the firm using FCFF method.                                                           [15]

Year

2019

2020

2021

2022

2023

2024

2025

Total Assets

10000

Fixed Assets

8000

Current assets

2000

Debt

4000

Equity

5000

Current liabilities

1000

Sales

15000

Operating expenses

12000

EBIT

3000

Int

400

PBT

2600

Tax(25%)

650

PAT

1950
  1. For first five years, growth rate is sales in 5% and from sixth year onwards it is 3%
  2. The asset turnover ratio remains constant
  3. The total debt to total asset ratio remains constant
  4. The depreciation rate is 25% and is already included in the operating expenses
  5. The ratio of operating expenses to sales remains constant
  6. The ratio of fixed assets to total assets remains constant
  7. The cost of capital for this firm is 15%
  8. The current ratio remains constant
  9. If you feel that some information is not provided, make some assumptions and write your assumptions in bold letters

Solutions

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jeff jeffy answered 1 year ago
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