Alpha Manufacturing has the following financial information for the current year and projected for next year. Calculate its projected free cash flow to equity. $\begin{array} { l r r }
& { \text { Current } } \
& \text { year } & \text { Prajected } \
\text { EBIT } & 1,500 & 1,800 \
\text { Operating a5sets } & 3,000 & 3,400 \
\text { Operating liabilities } & 200 & 220 \
\text { Tetal debt } & 1,500 & 1,800 \
\text { Interest rate an debt } & 6 \% & 6 \% \
\text { Trax rate } & 25 \% & 25 \%
\end{array}$

Question

Alpha Manufacturing has the following financial information for the current year and projected for next year. Calculate its projected free cash flow to equity. $\begin{array} { l r r } 
&  { \text { Current } } \
& \text { year } & \text { Prajected } \
\text { EBIT } & 1,500 & 1,800 \
\text { Operating a5sets } & 3,000 & 3,400 \
\text { Operating liabilities } & 200 & 220 \
\text { Tetal debt } & 1,500 & 1,800 \
\text { Interest rate an debt } & 6 \% & 6 \% \
\text { Trax rate } & 25 \% & 25 \%
\end{array}$

Quizplus · Accepted Answer

$\begin{array}{l}
\begin{array} { l } 
\text { Calculations }&\text { Current Year }\ \
\text { NOPAT}\
\text { TOC}&2800\
\text { Investment in TOC}\
\text { FCF}\
\text { Less After-tax interest expense}\
\text { Plus Increase in debt}\
\text { FCFE}\
\end{array}
\begin{array} { l } 
\text { Projected }\
& =\mathrm{EBITx}(1-\
1,350 & \text { (T) } \
3,180 &=\text { Operating assets - Operating liabilities } \
380 &=\text { Increase in TOC } \
970 &=\text { NOPAT } \text { - Increase in TOC } \
81 &=\text { Debt } x \text { interest rate } x(1-T) \
300&=\text { Change in debt }\
1,189&=\text { FCF }-\text { after-tax interest expense }+\text { increase in deb }\
\end{array}
\end{array}$
$\begin{aligned}
\end{aligned}$

Alpha Manufacturing Has the Following Financial Information for the Current