Internal code: MAS6682

Accounting Assignment:

At the beginning of its fiscal year 2006, an analyst made the following forecast for General Mills, Inc., the consumer foods company, for 2006-2009 (in millions of dollars): 2005              2006             2007               2008                  2009 Cash flow from operations                                                  2,014            2,057             2,095                   2,107 Cash investment in operations                                          300               380                442                       470 General Mills reported $6, 192 million in short-term and long-term debt at the end of 2005 but very little in interest-bearing debt assets. Use a required return of 9 percent to calculate both the enterprise value and equity value for General Mills at the beginning of 2006 under two forecasts for long-run cash flow a. Free cash flow will remain at 2009 levels after 2009. b. Free cash flow will grow at 3 percent per year after 2009. General Mills had 369 million shares outstanding at the end of 2005, trading at $47 per share. Calculate value per share and a value-to-price ratio under both scenarios. Questions: a. The net payout to shareholders (dividends and share repurchases minus share issues) in 2007 was $3,405.9 million. Calculate free cash flow using Method 1 and Method 2. b. The firm reported cash flow from operation s of $2,429 million in its 2007 cash flow statement and also reported net interest payments of $142.4 million. It reported $898 million in cash spent on investing activities, but this was after including a net $56 million from liquidating short-term interest-bearing securities. The firm's statutory tax rate is 36.6 percent. Calculate free cash flow from these reported numbers.  

Eureka! You've stumped our genius minds (for now)! This exciting new question has our experts buzzing with curiosity. We can't wait to craft a fresh solution just for you!

  • Uploaded By : celina
  • Posted on : January 22nd, 2018
Hire A Tutor
loader

Whatsapp Tap to ChatGet instant assistance