You are considering an investment in Fields and Struthers, Inc. and want to evaluate the firm’s...

You are considering an investment in Fields and Struthers, Inc. and want to evaluate the firm’s free cash flow. From the income statement, you see that Fields and Struthers earned an EBIT of $78 million, had a tax rate of 30 percent, and its depreciation expense was $9 million. Fields and Struthers’ gross fixed assets increased by $44 million from 2017 to 2018. The firm’s current assets increased by $32 million and spontaneous current liabilities increased by $22 million. Calculate Fields and Struthers’ operating cash flow for 2018. Calculate Fields and Struthers’ investment in operating capital for 2018. Calculate Fields and Struthers’ free cash flow for 2018.

Expert Solution

jeff jeffy answered 2 months ago

You are considering an investment in Fields and Struthers, Inc., and want to evaluate the firm’s...

You are considering an investment in Fields and Struthers, Inc., and want to evaluate the firm’s free cash flow. From the income statement, you see that Fields and Struthers earned an EBIT of $82 million, had a tax rate of 30 percent, and its depreciation expense was $9 million. Fields and Struthers’ gross fixed assets increased by $48 million from 2014 and 2015. The firm’s current assets increased by $36 million and spontaneous current liabilities increased by $24 million. What...

ou are considering an investment in Fields and Struthers, Inc. and want to evaluate the firm’s...

ou are considering an investment in Fields and Struthers, Inc. and want to evaluate the firm’s free cash flow. From the income statement, you see that Fields and Struthers earned an EBIT of $64 million, had a tax rate of 30 percent, and its depreciation expense was $5 million. Fields and Struthers’ gross fixed assets increased by $30 million from 2017 to 2018. The firm’s current assets increased by $26 million and spontaneous current liabilities increased by $15 million. Calculate...

You are considering an investment in Fields and Struthers, Inc.and want to evaluate the firm’s...

You are considering an investment in Fields and Struthers, Inc. and want to evaluate the firm’s free cash flow. From the income statement, you see that Fields and Struthers earned an EBIT of $70 million, had a tax rate of 34 percent, and its depreciation expense was $7 million. Fields and Struthers’ gross fixed assets increased by $36 million from 2017 to 2018. The firm’s current assets increased by $32 million and spontaneous current liabilities increased by $18 million.Calculate Fields...

[5] Let's say you want to evaluate an investment with an initial investment of $ 724,000,...

[5] Let's say you want to evaluate an investment with an initial investment of $ 724,000, a lifetime of 8 years, and a zero-residual value. Investment costs are depreciated by the straight-line depreciation method over the life of the investment. The annual sales volume is estimated at 90,000 units, with a price of $ 43 per unit, a variable cost of $ 29 per unit, and an annual fixed cost of $ 780,000. The tax rate is 35% and the...

You are trying to evaluate a private firm’s potential as a good investment opportunity. Your mentor...

You are trying to evaluate a private firm’s potential as a good investment opportunity. Your mentor at the investment bank you interned during the summer told you to collect information on comparable firms, which will help you find the WACC of the private firm. The private firm has ND/E ratio of 2. The risk free rate is 2%. Market risk premium is 5%. Cost of debt for the private firm is assumed is 6%. The tax rate is 50%. The...

You are considering an investment in a new machine. The firm’s tax rate is 30%. Answer...

You are considering an investment in a new machine. The firm’s tax rate is 30%. Answer this question in Excel. Please highlight or circle your answers. The machine is expected to have the following: Year Change in revenue Change in expenses After tax increases in revenue Change in depreciation Tax benefit of depreciation Change in net working capital Change in capital spending Incremental Cash Flow 0 0 0 0 +20,000 +100,000 =120,000 1 +20,000 +5,000 =10,500 15,000 +2,000 0 2...

As Chief Financial Officer (CFO), you are responsible for your firm’s investment choices. You are considering...

As Chief Financial Officer (CFO), you are responsible for your firm’s investment choices. You are considering whether or not to choose a project that will require a $15 million investment today and will generate $1 million in Year 1, $3 million in each of Years 2 through 5, $7 million in each of Years 6 through 8, and $12 million in each of Years 9 through 10. The appropriate interest rate is 15%. a) Find the payback period. b) Find...

You are considering a stock investment in one of two firms (NoEquity, Inc., and NoDebt, Inc.),...

You are considering a stock investment in one of two firms (NoEquity, Inc., and NoDebt, Inc.), both of which operate in the same industry and have identical operating income of $15.5 million. NoEquity, Inc., finances its $70 million in assets with $69 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. NoDebt, Inc., finances its $70 million in assets with no debt and $70 million in equity. Both firms pay a tax rate...

You are considering a stock investment in one of two firms (NoEquity, Inc. and NoDebt, Inc.),...

You are considering a stock investment in one of two firms (NoEquity, Inc. and NoDebt, Inc.), both of which operate in the same industry and have identical operating income of $9.5 million. NoEquity, Inc. finances its $20 million in assets with $19 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. NoDebt, Inc. finances its $20 million in assets with no debt and $20 million in equity. Both firms pay a tax rate...

You want to evaluate your savings of 2.500.000 $. If you deposit your money in the...

You want to evaluate your savings of 2.500.000 $. If you deposit your money in the A bank, you get 9% interest income in every three years. The B bank provides 4% interest income per year. The B bank also provides 6% annual income to the 4-year private account and 6% annual income to the 7-year private account. Also, if you invest your money in a 4-year government bond, 7.5% interest income per year. However, the government deducts 15% tax...

Question