St. Blues Technologies\' expected (next year) EBIT is $122.00, its tax rate is 3

Question

St. Blues Technologies' expected (next year) EBIT is $122.00, its tax rate is 32%, depreciation is $85.00, planned capital expenditures are $86.00, and planned DECREASES in net working capital is $34.00.

What is the free cash flow to the firm (FCFF)?

The firm's interest expense is $42.00. Assume the tax rate is 32% and the net debt of the firm DECREASES by 9%.

What is the free cash flow to equity (FCFE)?

What is the market value of equity if the FCFE is projected to grow at 2% indefinitely and the cost of equity is 15%?  (Round this answer to 2 decimal places.)  

Explanation / Answer

FCFF = EBIT * ( 1- Tax ) + Depreciation - Planned Capital Expediture + Decrease in net working capital
122.00 * ( 1-32%) + 85 -86 + 34 = 115.96

FCFE = (EBIT - Interest )( 1- Tax ) + Depreciation - Planned Capital Expediture + Decrease in net working capital - Net Decrease in Debt payment
= (122.00-42) * ( 1-32%) + 85 -86 + 34 - 0.09 * Debt
Debt value not given If this value known can be placed in above formula.
The calculate FCFE can be Placed Below
Market Value of Equity = FCFE1 / ( r -g) = FCFE * ( 1+ 2%)/(0.15 - 0.02) =

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