Information regarding financial forecast for new business

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Reference no: EM133112672

Consider the following information regarding the financial forecast for a new business:

Industry Sales Forecast

YEAR

2021

2022

2023

2024

2025

Total Market (in $ thousands)

8,956,000

9,403,800

9,873,990

10,367,690

10,886,075

Your business market share

1.20%

1.30%

1.40%

1.50%

3.00%

Industry Cost Structure

 

% of sales

COGS

36%

Depreciation

3%

Sales & Marketing Exp.

10%

Administrative Exp.

10%

YEAR

2021

2022

2023

2024

2025

CAPEX (in $ thousands)

$2,000

2,000

2,000

2,000

2,000

Investment in NWC is 10% of the change in sales

$1,478

?

?

?

?

Assume the business will be able to have the same cost structure as the industry since its first year of operations. The business is 100% equity financed (so there is no interest expense).

What is your forecast of the Free Cash Flow (FCF) for the business in 2023 (assume tax rate is 28%)?

Reference no: EM133112672

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