In: Accounting
Stiller Corporation Comparative Balance Sheet (2018-2019) in USD
# |
TEXT |
2019 |
2018 |
1 |
Cash |
$157,000 |
$78,000 |
2 |
Accounts Receivable |
180,000 |
185,000 |
3 |
Investments |
52,000 |
74,000 |
4 |
Equipment |
298,000 |
240,000 |
5 |
Less Accumulated depreciation |
(106,000) |
(89,000) |
6 |
Current liabilities |
134,000 |
151,000 |
7 |
Common Stock |
160,000 |
160,000 |
8 |
Retained Earnings |
287,000 |
177,000 |
Additional information:
Investments were sold at a loss (not extraordinary) of $7,000; no equipment was sold; cash dividends paid were $50,000; and net income was $160,000.
Prepare a statement of cash flows for 2019 for Stiller Corporation.
Calculate the company’s free cash flow.
Assuming the 2019 cash flows grow at the rates of 20%, 18%, 15% in 2020, 2021, and 2022 respectively, and then stabilizes at 10% calculate the current value of Stiller Corporation. Assume the company’s weighted average cost of capital is 12%.
Attached are images of two excel sheets, one with the solution and the other showcasing the formulas used.