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A firm currently has sales per share of $10.00 and expects sales to grow by 25% next year. The net profit margin is expected to be 15 percent.
A firm currently has sales per share of $10.00 and expects sales to grow by 25% next year. The net profit margin is expected to be 15 percent. Fixed capital investment (CAPX) net of depreciation is projected to be 65% of the sales increase and non-cash working capital requirements are 15 percent of the projected sales increase. Debt will finance 45% of the investments in net fixed assets and working capital. The company has an 11% required rate of return on equity. What is the firm's expected free cash flow to equity per share next year under these assumptions?
