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Question

Based on the financial data projections, you will estimate the free cash flow to the firm (FCFF) over the next

five years.

Assumptions for the MH company Business Plan

The forecasted turnover for the year N+1 is estimated at 4.4 million SAR. You anticipate an increase in turnover in N+2 of +15%, +10% in N+3, +5% in N+4, then a stabilization of growth at 2% per year. The projected operating margin rate is +4% for N+1, +5% for N+2 and +6% for subsequent years.  Depreciation expense is estimated at 4% of revenues, as well as CAPEX. The working capital requirement is assumed to equal 10% of the current yearly revenues.

Top Answer

FCF year 1 is -0.44 million Year 2. -0.02... View the full answer

Screenshot_20200104-174102__01.jpg

+
E
F
G
H
J
K
238
239
240
241
N+ 1
N+ 2
N+ 3
N+4
N+5
242
243
Revenue
4.40
5.06
5.57
5.84
5.96
244
Operating margin
0. 18
0.25
0.33
0.35
0.36
245
246
less: Depreciation
-0.18
-0.20
-0.22
-0.23...

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