Shady Sunglasses operates retail sunglass kiosks in shopping malls. Below is information related to the company:...

Shady Sunglasses operates retail sunglass kiosks in shopping malls. Below is information related to the company:

(dollar amounts in thousands)	2012	2013	2014	2015	2016	2017
Net Cash Flow from Operations	564	628	854	1059	1345	1655
Interest Expense after tax	122	134	148	145	155	148
Decrease (Increase) in Cash Required for Operations	-75	-54	-48	-32	-61	-48
Net Cash Flow from Investing	-287	-300	-310	-285	-294	-277
Net Cash from Debt Financing	210	204	140	85	-40	-46

Present Value Factors (WACC = 8.5%)	0.922	0.849	0.783	0.722	0.665

Using a five-year forecast horizon compute the sum of the present value of free cash flows accruing to all debt and common equity holders for years 2012 to 2016.

Use Excel cell reference

Solutions

Expert Solution

Year	2012	2013	2014	2015	2016	2017
Net Cash Flow from Operations	564	628	854	1059	1345	1655
Decrease (Increase) in Cash Required for Operations	-75	-54	-48	-32	-61	-48
Net Cash Flow from Investing	-287	-300	-310	-285	-294	-277
Net Cash from Debt Financing	210	204	140	85	-40	-46
Free cash flow to company = net cash flow from operation+decrease (increase) inn cash required for operation+net cash flow from investing +net cash flow from debt financing	SUM(F189:F192)	SUM(G189:G192)	SUM(H189:H192)	SUM(I189:I192)	SUM(J189:J192)	SUM(K189:K192)
Free cash flow to company	412	478	636	827	950	1284
Present value of free cash flow = free cash flow/(1+r)^n r = 8.5%	0.922	0.849	0.783	0.722	0.665
Free cash flo*PVF at 8.5%	F194*F195	G194*G195	H194*H195	I194*I195	J194*J195
Free cash flo*PVF at 8.5%	379.864	405.822	497.988	597.094	631.75
sum of present value of free cash flow	SUM(F197:J197)	2512.52

jeff jeffy answered 1 year ago

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