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%.
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Stiller Corporation Comparative Balance Sheet (2018-2019) in USD
# 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 depreciation (106,000) (89,000)
6 Current liabilities 134,000 151,000
7 Common Stock 160,000 160,000
8 Retained Earnings 287,000 177,000
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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- Leverage Cook Corporation issued financial statements at December 31, 2019, that include the following information: Balance sheet at December 31,2019 Assets $8,000,000 Liabilities $1,200,000 Stockholders' equity (300,000 shares) $6,800,000 Income statement for 2019: Income from operations $1,200,000 Less: Interest expense (100,000) Income before taxes $1,100,000 Less: Income taxes expense (0,30) (330,000) Net income $ 770,000 The levels of assets, liabilities, stockholders' equity, and operating income have been stable in recent years; however, Cook Corporation is planning a 51,800,000 expansion program that will increase income from operations by $350,000 to $1,550,000, Cook is planning to sell 8.5% notes at par to finance the expansion. Required: What earnings per share does Cook report before the expansion?Condensed balance sheet and income statement data for Jergan Corporation are presented here. Jergan CorporationBalance SheetsDecember 31 2020 2019 2018 Cash $ 29,600 $ 17,000 $ 17,600 Accounts receivable (net) 50,600 44,300 48,300 Other current assets 90,300 94,500 64,500 Investments 55,000 70,000 44,700 Plant and equipment (net) 500,400 370,600 357,400 $ 725,900 $ 596,400 $ 532,500 Current liabilities $ 85,400 $ 79,800 $ 69,900 Long-term debt 144,900 84,300 50,900 Common stock, $10 par 351,000 310,000 300,000 Retained earnings 144,600 122,300 111,700 $ 725,900 $ 596,400 $ 532,500 Jergan CorporationIncome StatementFor the Years Ended December 31 2020 2019 Sales revenue $ 737,000 $ 605,800 Less: Sales returns and allowances 39,700 30,300…Condensed balance sheet and income statement data for Jergan Corporation are presented here. Jergan CorporationBalance SheetsDecember 31 2020 2019 2018 Cash $ 29,600 $ 17,000 $ 17,600 Accounts receivable (net) 50,600 44,300 48,300 Other current assets 90,300 94,500 64,500 Investments 55,000 70,000 44,700 Plant and equipment (net) 500,400 370,600 357,400 $725,900 $596,400 $532,500 Current liabilities $85,400 $79,800 $69,900 Long-term debt 144,900 84,300 50,900 Common stock, $10 par 351,000 310,000 300,000 Retained earnings 144,600 122,300 111,700 $725,900 $596,400 $532,500 Jergan CorporationIncome StatementFor the Years Ended December 31 2020 2019 Sales revenue $737,000 $605,800 Less: Sales returns and allowances 39,700 30,300 Net sales 697,300 575,500…
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