Use the following information to answer the question(s) below:
-If Ideko's future expected growth rate is 5%,then the estimated free cash flow for 2011 is closest to:
A) 6,568
B) 11,151
C) 11,218
D) 12,137
E) 19,314

Question

Use the following information to answer the question(s) below:  
-If Ideko's future expected growth rate is 5%,then the estimated free cash flow for 2011 is closest to:
A) 6,568 
B) 11,151 
C) 11,218 
D) 12,137 
E) 19,314

Quizplus · Accepted Answer

B) After-Tax interest expense = interest expense(1 - T_c) = 8,160(1 - .35) = 5,304 (2010) Note T_c = income tax/pre-tax income = 5,678/16,223 = 35% Unlevered net income = net income + after tax interest expense = 10,545 + 5,304 = 15,849 NWC = Current assets - current liabilities = 50,872 - 10,448 = 40,424 FCF_t+1 = (1 + g) × Unlevered Net Income_T- g × New Working Capital_T - g × Fixed Assets_T FCF_t+1 = (1 + .05) × 15,849 - .05 × 40,424 - .05 × 69,392 = 11,150.65

Use the Following Information to Answer the Question(s) Below