Module 2 10 Year Cash Flow Forecasts Paper

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Using the income statement from the previous exercise, forecast a ten year cash flow using the following assumptions:

  • Capital Expenditures of $50,000 per year.
  • Leasehold Improvements of $10,000 per year.
  • DSO of 75 Days.
  • Inventory Turnover of 12 times.
  • Accounts Payable of 30 days.
  • Depreciation is constant.
  • The combined Federal and State Tax Rate is 40%.
  • There are no additional financing expenses associated with the transaction.

After you have completed your cash flow forecast, calculate a Net Present Value assuming a discount rate of 15%.

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Cash Flow Forecasts Exercise In Module 2, you will take your income statements and start to construct a cash flow that will also extend into Week 3. For the most part, cash flows are pretty straight forward. If you're going to experience trouble, it almost always happens with working capital. Remember that once you've calculated the Total Working Capital for Year 0, all future Working Capital needs will be incremental. Almost all of the variables will be provided to you here. Using the income statement from the previous exercise, forecast a ten year cash flow using the following assumptions: . Capital Expenditures of $50,000 per year. Leasehold Improvements of $10,000 per year. • DSO of 75 Days. • Inventory Turnover of 12 times. • Accounts Payable of 30 days. Depreciation is constant. The combined Federal and State Tax Rate is 40%. There are no additional financing expenses associated with the transaction. After you have completed your cash flow forecast, calculate a Net Present Value assuming a discount rate of 15%. Need Help? Instructions on how to access and upload assignments are available via the Help link in the left-hand course menu. 2007 UNITS 500,000 PRICE 2008 UNITS 540,000 PRICE 2009 UNITS 577,800 PRICE REVENUES Products Service $25,000,000.00 $1,500,000.00 $50.00 $28,080,000.00 $3.00 $1,593,000.00 $52.00 $30,946,968.00 $2.95 $1,675,620.00 53.56 2.90 TOTAL REVENUE $26,500,000.00 $53.00 $29,673,000.00 $54.95 $32,622,588.00 $56.46 EXPENSES COGS Administration Utilities Rent Depreciation Consultants Bad debt $10,000,000.00 $5,000,000.00 $200,000.00 $500,000.00 $500,000.00 $35,000.00 $15,000.00 $20.00 $11,124,000.00 $10.00 $5,151,600.00 $0.40 $205,200.00 $1.00 $513,000.00 $1.00 $502,200.00 $0.07 $43,200.00 $0.03 $10,800.00 $20.60 $12,260,916.00 $9.54 $5,304,204.00 $0.38 $213,786.00 $0.95 $531,576.00 $0.93 $502,686.00 $0.08 $40,446.00 $0.02 $17,334.00 $21.22 $9.18 $0.37 $0.92 $0.87 $0.07 $0.03 TOTAL EXPENSES $16,250,000.00 $32.50 $17,550,000.00 $32.50 $18,870,948.00 $32.66 $23.80 EBIT Margin $10,250,000.00 38.68% $20.50 $12,123,000.00 40.86% $22.45 $13,751,640.00 42.15% $24.67 EBITDA Margin $10,750,000.00 40.57% $21.50 $12,625,200.00 42.55% $23.38 $14,254,326.00 43.69%
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Hello buddyI have followed all the instructions and completed the paper. Please leave a potive comment and a good review.

Running Head: FORECAST 10-YEAR CASH FLOWS WITH GIVEN DATA AND
ASSUMPTIONS

Forecast 10-year cash flows with given data and assumptions
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FORECAST 10-YEAR CASH FLOWS WITH GIVEN DATA AND ASSUMPTIONS
Calculating growth rates using Units
2008 = (540000- 500000)/500000 = 8%
2009 = (577800-540000)/540000 = 7%
From the above calculations it is clear that the growth rate falls every year by 1%. Future
predictions may thus be made using rates that reduce with 1%. Below are the future predictions
for ten years.
2010 = 6%
2011 = 5%
2012 = 4%
2013 = 3%
2014 = 2%
2015 = 1%
2016 onwards = 0%
Calculating growth rate using the set pr...

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