Revenue and after tax operating cash flow

Assignment Help Microeconomics
Reference no: EM132423145

Problem: Fundamental valuation. Financial analyst is evaluating XS Company by using the FCFF valuation approach. The analyst has collected the following information on its expected revenues and after-tax operating income (in $ millions), each year for the next 5 years:
The company currently has 250 million shares trading at $10/share (book value of equity=$1 000 million). The company also had $800 million in debt outstanding (both book and market value) and $500 million in non-core financial investments and cash. The cost of capital for the firm is expected to be 10% for the next 5 years and drop to 8% thereafter.

Questions:

Assuming that the company is going to reinvest 40% of it's after-tax operating income in next 5 years, estimate the free cash flow to the firm each year for the next five years

NO additional information is given, we have no info about revenue and after tax operating cash flow, this is a corporate finance task.

Reference no: EM132423145

Questions Cloud

What was the cost of goods sold : What was the cost of goods sold if the firm's tax rate was 35 percent?
What is the change in the bond price if yield rate : By referring to the approximate convexity of the bond and the modified duration of the bond what is the change in the bond price if yield rate increase by 3%.
Listing of companies with dual-class shares : What are the benefits would listing of companies with dual-class shares, and other was the attempt to take over London stock exchange?
Discuss the ways or customer feedback into the organization : How are companies today using data analytics to "hear" customers when there are 1000s of comments to sift through? Use the Internet to see if you can come up
Revenue and after tax operating cash flow : NO additional information is given, we have no info about revenue and after tax operating cash flow, this is a corporate finance task.
Breaking the sound barrier with an aircraft : Breaking the Sound Barrier with an Aircraft ? Is Military aircraft really"passing" from subsonic to supersonic speeds?
What will be the net present value of the project : If the company decides to drill immediately, what will be the net present value (NPV) of the project?
What is an estimate of required return for investors : The most recent dividend was 3.02 and the current price is $24.04. What is an estimate of required return for investors?
What conflicts in corporate culture and firm objectives : What conflicts in corporate culture and firm objectives did the frustration that the China boss and its American employees experienced?

Reviews

Write a Review

Microeconomics Questions & Answers

  The free rider problem

Question: Explain why the free rider problem makes it difficult for perfectly competitive markets to provide the Pareto efficient level of a public good.

  Failure of the super committee is good thing for economy

Some commentators have argued that the failure of the “Super committee” is good thing for the economy?  Do you agree?

  Case study analysis about optimum resource allocation

Case study analysis about optimum resource allocation: -  Why might you suspect (even without evidence) that the economy might not be able to produce all the schools and clinics the Ministers want? What constraints are there on an economy's productio..

  Fixed cost and vairiable cost

Questions:  :   Which of the following are likely to be fixed costs and which variable costs for a chocolate factory over the course of a month?  Explain your choice.

  Problem - total cost, average cost, marginal cost

Problem - Total Cost, Average Cost, Marginal Cost: -  Complete the following table of costs for a firm.  (Note: enter the figures in the  MC   column  between  outputs of  0 and 1, 1 and 2, 2 and 3, etc.)

  Oligopoly and demand curve problem

Problem based on Oligopoly and demand curve,  Draw and explain the demand curve facing each firm, and given this demand curve, does this mean that firms in the jeans industry do or do not compete against one another?

  Impact of external costs on resource allocation

Explain the impact of external costs and external benefits on resource allocation;  Why are public goods not produced in sufficient quantities by private markets?  Which of the following are examples of public goods (or services)? Delete the incorrec..

  Shifts in demand and movements along the demand curve

Describe the differences between shifts in demand and movements along the demand curve. What are the main factors which can shift the demand curve? Explain why they cause the demand curve to shift. Use examples and draw graphs to support your discuss..

  Article review question

Article Review Question: Read the following excerpts from the article "Fruit, veg costs surge' by Todd, Dagwell, published in the Herald on January 25th 2011 and answer questions below:

  Long-term growth, international trade & globalization

Long-term Growth, International Trade & Globalization:- This question deals with concepts such as long-term growth, international trade and globalization. Questions related to trade deficit, trade surplus, gains from trade, an international trade sce..

  European monetary union (emu) in crisis

"Does the economic bailout of Spain and Greece spell the beginning of the end for the European Monetary Union (EMU)?"

  Development game “settlers of catan”

Read the rules of the game, the overview and the almanac for the Development Game "Settlers of Catan"

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd