Wall Street Prep Premium Exam 100% SOLUTION 2023//2024

A company has the following information: • 2013 retained earnings balance of $12 billion • Net income of $3.5 billion in 2014 • Capex of $200 million in 2014 • Preferred dividends of $100 million in 2014 • Common dividends of $400 million in 2014 What is the retained earnings balance at the end of 2014? - ANSWER 15 billion in order to find out how much cash is available to pay down short term debt, such as revolving credit line, you must take - ANSWER beginning cash balance + pre-debt cash flows - min. cash balance - required principal payments of LT and other debt to calculate interest expense in the future, you should do which of the following - ANSWER apply a weighted average interest rate times the average debt balance over the course of the year enterprise (transaction) value represents the: - ANSWER value of all capital invested in a business A debt holder would be primarily concerned with which of the following multiples? I. Enterprise (Transaction) Value / EBITDA II. Price/Earnings III. Enterprise (Transaction) Value / Sales - ANSWER 1 and 3 only On January 1, 2014, shares of Company X trade at $6.50 per share, with 400 million shares outstanding. The company has net debt of $300 million. After building an earnings model for Company X, you have projected free cash flow for each year through 2020 as follows: Year Free Cash Flow 250 280