Firm current and projected income statement

Reference no: EM13963177

JLChem Corporation, a chemical manufacturing firm with changing investment opportunities, is considering a major change in dividend policy. It currently has 50 million shares outstanding and pays an annual dividend of $2 per share. The firm current and projected income statement are provided below (in millions):

	Current	Projected for Next Year
EBITDA	$1,200	$1,350
- Depreciation	$200	$250
EBIT	$1,000	$1,100
- Interest expense	$200	$200
EBT	$800	$900
- Taxes	$320	$360
Net income	$480	$540

The firm's current capital expenditure is $500 million. It is considering five projects for the next year:

Project	Investment	Beta	IRR (Using Cash Flows to Equity)
A	$190 mil	0.6	12.0%
B	$200 mil	0.8	12.0%
C	$200 mil	1.0	14.5%
D	$200 mil	1.2	15.0%

$100 mil

1.5

20.0%

Reference no: EM13963177

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