fm3 8 - 3-12 a NOPAT = EBIT(1 Tax rate = $150,000,000(0.6 =...

Info iconThis preview shows page 1. Sign up to view the full content.

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

Unformatted text preview: 3-12 a. NOPAT = EBIT(1 - Tax rate) = $150,000,000(0.6) = $90,000,000. b. NOWC06 = Operating CA – operating CL = $360,000,000 - ($90,000,000 + $60,000,000) = $210,000,000. NOWC07 = $372,000,000 - $180,000,000 = $192,000,000. c. Operating capital06 = Net plant Net operating + and equipment working capital = $250,000,000 + $210,000,000 = $460,000,000. Operating capital07 = $300,000,000 + $192,000,000 = $492,000,000. d. FCF = NOPAT - Net investment in operating capital = $90,000,000 - ($492,000,000 - $460,000,000) = $58,000,000. e. The large increase in dividends for 2005 can most likely be attributed to a large increase in free cash flow from 2004 to 2005, since FCF represents the amount of cash available to be paid out to stockholders after the company has made all investments in fixed assets and working capital necessary to sustain the business. Answers and Solutions: 3 - 8 ...
View Full Document

This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.

Ask a homework question - tutors are online