Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:The 2021 income statement for Duffy's Pest Control shows that depreciation expense was $203 million, EBIT was $516 million, and the
tax rate was 35 percent. At the beginning of the year, the balance of gross fixed assets was $1,586 million and net operating working
capital was $423 million. At the end of the year, gross fixed assets was $1,839 million. Duffy's free cash flow for the year was $429
million.
Calculate the end-of-year balance for net operating working capital. (Enter your answer in millions of dollars rounded to 1 decimal
place.)
Net operating working capital
million
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- Assume that today is December 31, 2022, and the following information applies to XavierAirlines:-After-tax operating income [EBIT (1 - T)] for the just ended year is $900 million.-The depreciation expense for the just ended year was $140 million.-The capital expenditure for the just ended year was $225 million.-There was no change in net operating working capital from the previous year.-Analysts estimate that Xavier’s free cash flow is expected to grow on average, at a rate of8% per year for the next 5 years after which growth is expected to moderate to 4% at aconstant rate.-The weighted average cost of capital (WACC) for Xavier is 10%.-The market value of the company's debt is $2.875 billion.-Xavier has 300 million shares of stock are outstanding.Using the corporate valuation model approach, what should be:a. The value of Xavier Airlines today (the firm)?b. The value of Xavier Airlines’ Common Equity?c. The intrinsic value of Xavier’s stock price today?arrow_forwardDuring 2020 Quail, Inc. had sales of $86,000. In addition, during 2020 Quail received $4,000 in cash that was still unearned at the end of 2020. The company had cost of goods sold of $44,000, and it paid $40,000 for inventory during the year. What was Quail's gross profit for 2020? O $42,000 $56,000 O $46,000 O $50,000 None of the abovearrow_forwardForaker Inc. has sales of $52,900, costs of $35,443, depreciation expense of $3,480, and interest expense of $2,105. If the tax rate is 21%, the operating cash flow (OCF) is:arrow_forward
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