Question

In: Finance

Nova Electrics anticipates cash flow from operating activities of $13 million in 20X1. It

Nova Electrics anticipates cash flow from operating activities of $13 million in 20X1. It will need to spend $8.5 million on capital investments to remain competitive within the industry. Common stock dividends are projected at $1.1 million and preferred stock dividends at $1.3 million.

a. What is the firm's projected free cash flow for the year 20X1?

Solutions

Expert Solution

Just Paid dividend = D = 3

 

Growth by 20%

D1 = 3(1.2) = $3.60

 

Growth by 15%

D2= 3.6(1.15) = $4.14

 

Growth by 10%

D3 = 4.14(1.1) = $4.554

 

Constant growth = 5%

 

D4 = 4.554(1.05) = $4.7817

 

Required rate = 15%

 

 

Current price of stock "TL 40.70" is the current value of stock.

Current price of stock "TL 40.70" is the current value of stock.

Nabeel answered 1 year ago
Next > < Previous

Related Solutions

Differentiate the cash flow from asset from the cash flow from operating activities, financing activities and...
Differentiate the cash flow from asset from the cash flow from operating activities, financing activities and investing activities. Why is it important to study the operating cash flow of a company? Illustrate your answer with example(s).
Differentiate the cash flow from asset from the cash flow from operating activities, financing activities and...
Differentiate the cash flow from asset from the cash flow from operating activities, financing activities and investing activities. Why is it important to study the operating cash flow of a company? Illustrate your answer with example(s).
During the last year, Globo-Chem Co. generated $702 million in cash flow from operating activities and...
During the last year, Globo-Chem Co. generated $702 million in cash flow from operating activities and had negative cash flow generated from investing activities (-$384 million). At the end of the first year, Globo-Chem Co. had $120 million in cash on its balance sheet, and the firm had $380 million in cash at the end of the second year. What was the firm’s cash flow (CF) due to financing activities in the second year? -$29.00 million $72.50 million -$58.00 million...
Determining Net Income from Net Cash Flow from Operating Activities Curwen Inc. reported net cash flow...
Determining Net Income from Net Cash Flow from Operating Activities Curwen Inc. reported net cash flow from operating activities of $193,000 on its statement of cash flows for the year ended December 31. The following information was reported in the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method: Decrease in income taxes payable $3,700 Decrease in inventories 9,300 Depreciation 14,300 Gain on sale of investments 6,400 Increase in accounts payable 2,600 Increase...
Which of the following items would not be included as a cash flow from operating activities...
Which of the following items would not be included as a cash flow from operating activities in a statement of cash flows? Multiple Choice Collections from customers. Interest on note payable. Purchase of equipment. Purchase of inventory.
Cash flows from operating activities on the Cash Flow Statement includes things such as issuing stock...
Cash flows from operating activities on the Cash Flow Statement includes things such as issuing stock and debt. Group of answer choices A) True B) False
A statement of cash flows contains the following sections: a. net cash flow from operating activities...
A statement of cash flows contains the following sections: a. net cash flow from operating activities b. cash flows from investing activities c. cash flows from financing activities d. investing and financing activities not affecting cash A list of items that appear on the statement is provided below: ____ 1. Depreciation expense ____ 2. Proceeds from sale of land at a gain ____ 3. Decrease in accounts payable ____ 4. Conversion of bonds to common stock ____ 5. Payment of...
Cash Flows from Operating Activities—Direct Method The cash flows from operating activities are reported by the...
Cash Flows from Operating Activities—Direct Method The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following: a. If sales for the current year were $509,900 and accounts receivable decreased by $32,600 during the year, what was the amount of cash received from customers? $ b. If income tax expense for the current year was $44,200 and income tax payable decreased by $4,400 during the year, what was the amount...
“There is a growing discrepancy between the company’s Cash Flow from Operating Activities and its reported...
“There is a growing discrepancy between the company’s Cash Flow from Operating Activities and its reported Net Income. Summed over the last three years, total Net Income is about $10 billion while the total Cash Flow from Operations is double this amount, about $20 million! The company must be overstating its expenses and reserves/allowances.” After reviewing Starbucks' 2018 10K, comment on this statement. What are the main reasons for the above-mentioned discrepancy? Do you agree that the discrepancy represents a...
a. Using the information for the Seville Corporation above, calculation the cash flow from operating activities....
a. Using the information for the Seville Corporation above, calculation the cash flow from operating activities. b. Using the information for the Seville Corporation above, calculation the cash flow from investing activities. c. Using the information for the Seville Corporation above, calculation the cash flow from financing activities. Accounts payable increase            9,000 Accounts receivable increase            4,000 Accrued liabilities decrease            3,000 Amortization expenses            6,000 Cash balance Jan 1          22,000 Cash balance Dec 31            1,500 Cash...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT