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Ch14 P13 Build a Model - Chapter 14 Ch 14-13 Build a Model...

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4/16/2010 Chapter 14. Ch 14-13 Build a Model Inputs Amount of distribution $500 Tax rate 40% WACC 11.0% Number of shares 1,000 FCF constant growth rate 6.0% Actual Projected Income Statement (Millions of Dollars) 6/30/2010 6/30/2011 Net Sales $20,000.00 $21,200.00 Costs (except depreciation) $16,000.00 $16,960.00 Depreciation $1,300.00 $1,378.00 Earning before int. & tax $2,700.00 $2,862.00 Interest expense $150.00 $152.82 Earnings before taxes $2,550.00 $2,709.18 Taxes $1,020.00 $1,083.67 Net income $1,530.00 $1,625.51 See below for calculations. Balance Sheets (Millions of Dollars) Actual Assets 6/30/2010 6/30/2011 7/1/2011 7/2/2011 Cash $160.00 $169.60 $169.60 $169.60 Short-term investments $200.00 $640.00 Accounts receivable $2,000.00 $2,120.00 $2,120.00 $2,120.00 Inventories $3,000.00 $3,180.00 $3,180.00 $3,180.00 Total current assets $5,360.00 $6,109.60 $5,469.60 $5,469.60 Net plant and equipment $13,000.00 $13,780.00 $13,780.00 $13,780.00 Total assets $18,360.00 $19,889.60 $19,249.60 $19,249.60 Liabilities & Equity Accounts payable $1,000.00 $1,060.00 $1,060.00 $1,060.00 Accruals $2,000.00 $2,120.00 $2,120.00 $2,120.00 Short-term debt $400.00 $0.00 $0.00 $0.00 Total current liabilities $3,400.00 $3,180.00 $3,180.00 $3,180.00 Long-term debt $2,068.18 $2,192.27 $2,192.27 $2,192.27 Total liabilities $5,468.18 $5,372.27 $5,372.27 $5,372.27 Common stock $5,851.82 $5,851.82 $5,851.82 $5,851.82 Treasury stock ($400.00) ($400.00) Retained earnings $7,440.00 $9,065.51 Total common equity $12,891.82 $14,517.33 $5,851.82 $5,851.82 Total liabilities & equity $18,360.00 $19,889.60 $11,224.09 $11,224.09 Check for balance: c. Caculate JCI's projected free cash flow; the tax rate is 40%.
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