QUESTIONS

FREE CASH FLOW TO THE FIRM?

NPV OF EXPECTED CASH FLOWS?
FIND SUITABLE DISCOUNT RATE?
COST OF CAPITAL?
Total Cash Investment
SOLUTION
Formula
FREE CAS FLOWS FOR NEXT FIVE YEARS
Part -A

add

add
add
Minus
=
 M.Arslan Mumtaz
Sap ID 70077842
Corporate Finance

14000

= Net Income+D

YEARS 1 2 3
Net Income 655.00 756.00 862.00
Depriciation 900.00 945.00 983.00
Interest 165.00 175.00 185.00
interest(1-tax rate) 115.50 122.50 129.50
Change in WC 200.00 250.00 250.00
Capital expenditure 7,200.00 8,400.00 9,600.00
Free Cash Flow to Company 5,329.50 6,326.50 7,375.50
 MBA

Net Income+Depriciation+Interest(1-tax rate)+change in Working Capital-Capital Expenditure

4 5 6 7 8 9
973.00 1,088.00 1,142.40 1,199.52 1,259.50 1,322.47
1,016.00 1,043.00 1,095.15 1,149.91 1,207.40 1,267.77
194.00 202.00 212.10 222.71 233.84 245.53
135.80 141.40 127.26 133.62 140.30 147.32
250.00 250.00 160.00 168.00 176.40 185.22
10,800.00 12,000.00 13,200.00 14,400.00 15,600.00 16,800.00
8,425.20 9,477.60 10,675.19 11,748.95 12,816.40 13,877.22

5.00%
al Expenditure

10
Change
1,388.59
1,331.16 0 1 2 3 4 5 6 7 8 9
257.81
154.69 2000 2200 2450 2700 2950 3200 3360 3528 3704 3890
194.48 200 250 250 250 250 160 168 176.4 185
18,000.00
14,931.08
 10

4084
194