Long FCFE Q in PM

it was the foreceasted FCFE where you had all the % of sales. I put B) 2310. Sound familiar?

that sounds right

+1

I did my careful cals on this set of questions, B is right! using FCFE = NI - (1-D.R.) (FC+WC- Depreciation) and multi-stage.

unreal, spent the last 5 min of the PM trying to get this, couldnt get it with about 30 sec left, closed my eyes and guessed B

FCFE = NI - (1-DR)(FCInv + WCInv - Dep) was there a trick in there with the depreciation? like the FCInv figure already including depreciation % or something? (they actually gave you both) just wondering, i don’t remember my answer.

danielsky Wrote: ------------------------------------------------------- > I did my careful cals on this set of questions, B > is right! using > FCFE = NI - (1-D.R.) (FC+WC- Depreciation) and > multi-stage. I never had to use this equation yesterday. I was able to get to the correct answer using FCFE = NI + NCC - FCInv - WCInv + net borrowing

sales were like 3500 and 4200, net income was given as like 18% of sales and then you add back depreciation which was 10% subtract FCinv which was xx% subtract WCinc which was xx% and add back the borrowing off the FCinv which was like 17.5% of FCinv then you discount the first one back (1+x) and the second one (1+x)^2, then they gave a terminal value for 2010 which you discount back (1+x)^2 I dont remember the answer but I think it was the 2310

they gave 2009 and 2010 sales and other info. along with debt ratio of 12.75%. that lends itself easily to my way of calculating. But there are other ways I believe. all roads lead to CFA PASS. :slight_smile:

nice- i couldn’t get it to the answer exactly but B was closest to mine so giddy up, at least one guess in the win column.

another FCFE problem: they askedu to find FCFE and u had to start from EBITDA. the change in grpss fixed asest confused me but i made that my fcinv. after finding FCFF i then found FCFE. final answer was like 339 ©

Arse I didn’t see the debt ratio bit, i didn;'t use it. This forum sucks

YUP! The exactly calculation result is 338.54 something…!! :slight_smile:

if you start w/ EBITDA, don’t forget to back out int(1-tax)… i had trouble initially, and then i rememberd to do it. to check my work, i just derived NI from the table and started w/ the NI equation…

Agreed, the answer was something like 336, the trick was the -ve WCinv

I forget what I got exactly for that but it said specifically that FIXED CAPITAL investment would be funded by 18.75% debt (they did not mention WCInv) so I did NI - (1-D)*(FCInv - Depr) - WCInv Unfortunately the number I computed was not one of the answers… so who knows… probably should have tried NI - (1-D)*(FCInv + WCInv - Depr)

That FCFE question took so long I just prayed that my answer would show as one of the answer choices. Luckily it did. I don’t know what I would have done if my answer wasn’t there after all that work. I hope I got it right. You know how they love to put the most typical “wrong” answers in the choices so you never know.

339 c choice rigth?

339 c choice rigth?

if you took the wc inv which is an INFLOW as opposed to usual outflow and then used the right FCFF calculations (ni+ncc+int91-t)-capex-wc) , then deducted the interest expense (1-t) + netborrowings you should land with the right choice