Prepare an unlevered free cash flow schedule for The Second Market Value Company as of Year 0 using the information in the previous problem and the financial statements provided in Exhibit P1.1. Note that the company has $500 of depreciation which is part of Cost of Goods Sold and Selling, General and Administrative. The tax rate is 40%. The company holds no excess cash so the change in cash is the change in its required cash?
Homework Answers
unlevered free cash flow = earnigs before interest, tax - taxes + depreciation and amortization - capital expenditure - change in working capital
| unlevered cash flow | amount ($) |
| earnings before interest and tax | 1540 |
| less:taxes | -392 |
| add:depreciation and amortization | 500 |
| less:capital expenditure | -190 |
| less:change in working capital | -40 |
| 1418 |
| capital expenidture | amount ($) | |
| year 0 property,plant and equipment | 6220 | |
| year -1 property,plant and equipment | 6030 | |
| capital expenditure | 190 | |
| working capital | current assets - current liabilities | amount ($) |
| year 0 | year-1 | |
| current assets | 1310 | 1240 |
| current liabilities | 320 | 290 |
| working capital | 990 | 950 |
| net change in working capital | 40 |
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