Q8. You have been given the attached information on the ABC…
Q8. You have been given the attached information on the ABC Company. ABC expects sales to grow by 30 percent in 2019 and operating costs should increase in proportion to sales. Fixed assets were being operated at 90 percent of capacity in 2018, but all other assets were used to full capacity. Underutilized fixed assets cannot be sold. Current assets and spontaneous liabilities should increase in proportion to sales during 2019. The company plans to finance any external funds needed as 40 percent notes payable and 60 percent long-term debt. The interest rate is 8 percent and you can assume that interest expenses will be paid at the beginning of the year. That is, interest expenses for 2019 will be based on the amount of debt at the end of 2018. The dividend payout ratio (50%) will remain constant. Information on the ABC Company: Year 2018 Sales $1,000.00 Operating costs 800.00 EBIT $ 200.00 Interest 15.00 EBT $ 185.00 Taxes (40%) 74.00 Net Income $ 111.00 Dividends (50%) 55.50 Add’n to R.E. $ 55.50 December 31, 2018 Current Assets $ 700.00 Net fixed Assets 300.00 Total assets $1,000.00 A/P and Accruals $ 150.00 N/P 100.00 Long term debt 100.00 Common stock 150.00 Retained earnings 500.00 Total Liab & Equity $1,000.00 Calculate Additional Funding Needed (AFN).
Read DetailsQ 17. Suppose Leonard, Nixon, & Shull Corporation’s projecte…
Q 17. Suppose Leonard, Nixon, & Shull Corporation’s projected free cash flow for next year is $100,000 (FCF1), and FCF is expected to grow at a constant rate of 6%. If the company’s weighted average cost of capital is 11% and the value of non-operating asset is $200,000, what is total corporate value?
Read Details