prob sol 2-4 (second edition corrected)

prob sol 2-4 (second edition corrected) - (430) TCM's...

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Problem 2-4 Page 1 PROBLEM 2.4 Note: The text incorrectly labeled the column headings for 2009 and 2010. This solution has corrected the labels. Given Solution Legend TCM Petroleum Dec-09 Dec-10 = Value given in problem Sales $12,211.00 $13,368.00 = Formula/Calculation/Analysis required Cost of Goods Sold (9,755.00) (10,591.00) = Qualitative analysis or Short answer required Gross Profit 2,456.00 2,777.00 = Goal Seek or Solver cell (704.00) (698.00) = Crystal Ball Input Operating Income Before Deprec. 1,752.00 2,079.00 = Crystal Ball Output (794.00) (871.00) Operating Profit 958.00 1,208.00 Interest Expense (265.00) (295.00) Non-Operating Income/Expense 139.00 151.00 Special Items 20.00 - Pretax Income 852.00 1,064.00 Total Income Taxes (340.80) (425.60) Net Income $511.20 $638.40 875 1,322 Increase in Net Working Capital 102
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Unformatted text preview: (430) TCM's average tax rate 40% 40% Solution Year 2009 2010 EBIT $958 $1,208 EBIT(1-T) = NOPAT 575 725 Plus: Depreciation Expense 794 871 Less: CAPEX (875) (1,322) Less: Working Capital Investment (102) 430 Firm Free Cash Flow $392 $704 Year 2010 2011 2012 2013 2014 2015 EBIT (Growing at 10% per year) $1,208 $1,329 $1,462 $1,608 $1,769 $1,945 EBIT(1-.40) = NOPAT 725 797 877 965 1,061 1,167 Plus: Depreciation Expense 871 1,003 1,103 1,203 1,303 1,403 Less: CAPEX (1,322) (1,000) (1,000) (1,000) (1,000) (1,000) Less: Working Capital Investment 430 (100) (100) (100) (100) (100) Firm Free Cash Flow $704 $700 $880 $1,068 $1,264 $1,470 CAPEX estimated as follows: CAPEX = NET PP&E ending + Depreciation - NET PP&E beginning Increase in Net Working Capital estimated as follows: NWC 2010 - NWC 2009 a. FCF Calculations for 2009-2010 b. Estimated FCF for 2011-2015...
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