Reference no: EM132801400
Question - I. In 2020, Cane Manufacturing has CAPX of $125,000, Depreciation of $40,000, and EBIT of $450,000. The tax rate is 30%. The following 2019 and 2020 accounts are:
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Item
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2019
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2020
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Required cash
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50,000
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75,000
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Accounts receivable
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200,000
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250,000
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|
Inventories
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300,000
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360,000
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Accounts payable
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100,000
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120,000
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Accrued liabilities
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40,000
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50,000
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Each part below is worth 5 marks. Answer the following:
a) What is the change in Net Operating Working Capital in 2020?
b) What is the Enterprise Value Cash Flow in 2020?
II. PT Industries has debt of $1,450. In Parts a) and b) assume that surplus cash is zero. Parts a), b), and c) are each worth 4 marks. Part d) is worth 4 marks. Answer the following:
a) If the equity value is $2,650, what is the enterprise value?
b) If the enterprise value is $5,400, what is the equity value?
c) Assume PT Industries has $500 in surplus cash. If the equity value is $2,650 as in part a), what is the enterprise value?
d) Assume PT Industries has $500 in surplus cash. If the enterprise value is $5,400 as in part b), what is the equity value?
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