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Unformatted text preview: 11-1Meltzer Electronics estimates that its total financing needs for the coming year will be $34.5 million. During the coming fiscal year, the firms required financing payments on its debt-and-equity financing will total $12.9 million. The firms financial manager estimates that operating cash flows for the coming year will total $33.7 million and that the following changes will occur in the accounts noted.Account Forecast ChangeGross fixed assets$8.9 MillionChange in Current Assets+2.3 MillionChange in accounts payable+1.3 MillionChange in accrued liabilities +0.8 Milliona.Use equation 2.3 and the data provided to estimate Meltzers free cash flow in the coming year. Equation 2.3 = Free cash flow = operating cash flow change in gross fixed assets (change in current assets change in accounts payable change in accrued liabilities)b.How much of the free cash flow will the firm have available as a source of new internal financing in the coming year?c.How much external financing will Meltzer require during the coming year to meet its total forecast financing need?a.Free cash flow = Operating cash flow additional capital expenditures additional working capital needsOperating cash flow: $33.7 millionAdditional gross fixed assets: $8.9 millionAdditional current assets: $2.3 millionAdditional current liabilities: $1.3 millionAdditional accrued liabilities: $.8 millionFree cash flow = 33.7 8.9 (2.3-1.3-.8) = $24.6 millionb. The firm will need to pay $12.9 of the $24.6 million for required debt and equity financing, leaving $11.7 of internal financing....
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