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In: Finance

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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