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As your boss, I ask you to analyze this stock and tell me if what we should do about it. You determine that you need to answer 3 basic questions to make me happy and post your answer by Sunday night so I can trade on it Monday morning.

Given the following data what is the free cash flow?1

With our current state the free cash flow is $1,233 billion.

If you assume 6% growth for three years, 3% growth after that, and a required rate of return of 5% what's the NPV of the cash flow going forward? 2

The NPV of the cash flow going forward is $69,073 billion.

And at what price would you feel it's a strong buy and what price would be a strong sell? 3

It would be best to buy at

NDNU CORPORATION Common stock (1 million shares)

INCOME STATEMENTS FOR YEAR ENDING SEPTMEBER (THOUSANDS OF DOLLARS)

2013

2012

Sales

126,508

98,249

Operating costs excluding depreciation

47,846

34,431

Earnings before interest and taxes

78,662

63,818

Less interest

0

0

Earnings before taxes

78,662

63,818

Taxes (25%)

19,665

15,954

Net income available to common stockholders

58,996

47,863

Common dividends

0

0

BALANCE SHEETS FOR YEAR ENDING SEPTEMBER (THOUSANDS OF DOLLARS)

2013

2012

Assets

Cash and marketable securities

59,129

35,982

Accounts receivable

41,275

13,731

Inventories

7,249

5,305

Total current assets

107,673

55,018

Net plant and equipment

and other assets

98,621

84,782

Total assets

206,294

139,800

Liabilities and equity

Accounts payable

42,589

33,879

Notes payable

0

0

Accruals

0

0

Total current liabilities

42,589

33,879

Long-term bonds

0

0

Total debt

42,589

33,879

Retained earnings

137,474

82,477

Common stock

26,121

23,444

Common Equity

163,595

101,922

Total liabilities and equity

206,294

139,800

 

2013

2012

Sales

126,508

98,249

Operating costs excluding depreciation

47,846

34,431

Earnings before interest and taxes

78,662

63,818

Less interest

0

0

Earnings before taxes

78,662

63,818

Taxes (25%)

19,665

15,954

Net income available to common stockholders

58,996

47,863

Common dividends

0

0

Bottom of Form

 

 

Solution
5 (1 Ratings )

Solved
Finance 4 Months Ago 87 Views
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