{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Solutions_to_Ch._3_HW_Problems_-_Financial_Statements

# Solutions_to_Ch._3_HW_Problems_-_Financial_Statements -...

This preview shows pages 1–2. Sign up to view the full content.

Solutions to Ch. 3 Homework Problems 3-10 a. NOPAT = EBIT(1 – T) = \$4,000,000,000(0.6) = \$2,400,000,000. b. NCF = NI + DEP and AMORT = \$1,500,000,000 + \$3,000,000,000 = \$4,500,000,000. c. OCF = NOPAT + DEP and AMORT = \$2,400,000,000 + \$3,000,000,000 = \$5,400,000,000. d. FCF = NOPAT – Net Investment in Operating Capital = \$2,400,000,000 – \$1,300,000,000 = \$1,100,000,000. 3-11 Working   up   the   income   statement   you   can   calculate   the   new   sales   level   would   be  \$12,681,482. Sales \$12,681,482 \$5,706,667/(1  -  0.55) Operating  costs (excl. D&A)     6,974,815 \$12,681,482  ×  0.55 EBITDA \$  5,706,667 \$4,826,667   \$880,000 Depr. & amort.        880,000 \$800,000  ×  1.10 EBIT \$  4,826,667 \$4,166,667   \$660,000 Interest        660,000 \$600,000  ×  1.10 EBT \$  4,166,667 \$2,500,000/(1  -  0.4) Taxes (40%)     1,666,667 \$4,166,667  ×  0.40 Net income \$  2,500,000 3-12 a. Because we’re interested in net cash flow available to common stockholders, we exclude  common dividends paid. CF 05 = NI available to common stockholders + Depreciation and amortization = \$372 + \$220 = \$592 million. The net cash flow number is larger than net income by the current year’s depreciation  and amortization expense, which is a noncash charge.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
b.
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}