A research analyst wants to use the discounted free cash flow model to determine the enterprise value of Machinex Ltd, a heavy machinery manufacturing company. The analyst has put together the following forecast of Machinex's income statement over the next three years (all figures in $ million): All figures in $ million Financial year ending 31 March 2024 2025 Revenue 180.0 Less: Operating expenses 120.0 Operating earnings before depreciation 60.0 Less: Depreciation 30.0 Earnings before interest and tax (EBIT) 30.0 5.0 25.0 7.0 18.0 Less: Interest expense Earnings before tax Less: Tax expense Net profit (earnings) 2026 200.0 240.0 128.0 145.0 72.0 95.0 25.0 20.0 47.0 75.0 5.0 5.0 42.0 70.0 11.8 19.6 30.2 50.4 In addition, the analyst has determined that: Operating working capital (OWC) in each year will be 15% of revenue in that year Capital expenditure (capex) will be $30 million in each year The corporate tax rate is 28%. . Machinex's free cash flow to the firm (FCF) in year 2026 is $ million. Note: Please provide your answer with two decimal points in $ million in the format of xx.xx (for example, if the answer is $12.34 million, type in 12.34).

A research analyst wants to use the discounted free cash flow model to determine the enterprise value of Machinex Ltd, a heavy machinery manufacturing company. The analyst has put together the following forecast of Machinex's income statement over the next three years (all figures in $ million): All figures in $ million Financial year ending 31 March 2024 2025 Revenue 180.0 Less: Operating expenses 120.0 Operating earnings before depreciation 60.0 Less: Depreciation 30.0 Earnings before interest and tax (EBIT) 30.0 5.0 25.0 7.0 18.0 Less: Interest expense Earnings before tax Less: Tax expense Net profit (earnings) 2026 200.0 240.0 128.0 145.0 72.0 95.0 25.0 20.0 47.0 75.0 5.0 5.0 42.0 70.0 11.8 19.6 30.2 50.4 In addition, the analyst has determined that: Operating working capital (OWC) in each year will be 15% of revenue in that year Capital expenditure (capex) will be $30 million in each year The corporate tax rate is 28%. . Machinex's free cash flow to the firm (FCF) in year 2026 is $ million. Note: Please provide your answer with two decimal points in $ million in the format of xx.xx (for example, if the answer is $12.34 million, type in 12.34).

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter7: Valuation Of Stocks And Corporations

Section: Chapter Questions

Problem 23SP

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