a. Prepare a statement of cash flows for 2019 for Stiller Corporation. b. Calculate the company’s free cash flow. c. Assuming the 2019 cash flows grow at the rates of 20%, 18%, 15% in 2020, 2021, and 2022 respectively, and then stabilizes at 10% calculate the current value of Stiller Corporation. Assume the company’s weighted average cost of capital is 12%.
Stiller Corporation Comparative
# TEXT 2019 2018
1 Cash $157,000 $78,000
2 Accounts Receivable 180,000 185,000
3 Investments 52,000 74,000
4 Equipment 298,000 240,000
5 Less Accumulated
6 Current liabilities 134,000 151,000
7 Common Stock 160,000 160,000
8
Additional information:
Investments were sold at a loss (not extraordinary) of $7,000; no equipment was sold;
cash dividends paid were $50,000; and net income was $160,000.
a. Prepare a statement of cash flows for 2019 for Stiller Corporation.
b. Calculate the company’s
c. Assuming the 2019 cash flows grow at the rates of 20%, 18%, 15% in 2020, 2021,
and 2022 respectively, and then stabilizes at 10% calculate the current value of
Stiller Corporation. Assume the company’s weighted average cost of capital is 12%.
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