Let us proceed to answering the immediately preceding question. For accuracy of results, it is necessary to carefully pay attention to the parameters or assumptions provided, especially on number of shares outstanding (12.5 million), tax rate (32%), plowback ratio (50%), corporate gross income range (from $90 to $100 million), and range of cash flows from assets today or CFFA0 and the years thereafter (from $10 to $13 million). There is additional crucial information missing, such as the constant growth rate and weighted average cost of capital or WACC. In this connection, since they are important to the relevant quantitative analyses in the following sections, let us further assume that the constant growth rate is 5%, while the WACC is 3%. At this point, we may now start with the very first step of a relatively lengthy quantitative analysis
Note how the assumptions and other provided information require the construction of a pair of balance sheets and an income statement for the most recent period. Because of this, the statements on the previous page were prepared.
To proceed with the quantitative analysis, cash flows from assets or CFFA is the total amount of cash that a business or company returns to its creditors and owners as providers of debt and equity capital, respectively. Specifically, operating activities net cash flow, net capital spending, and increase or decrease in net working capital are the elements of CFFA.
To continue, it is important to learn that there are various methods of calculating CFFA. In this suggested solution, the cash flow
identity method is illustrated:

CFFA=Cash flow to Creditors+Cash flow to Equity Holders

The above formula informs us that from this point onward, a two-step process follows. Computing for the first half of the equation, Cash flow to Creditors, which will be conveniently denoted as CFC, we will utilize the following formula:

CFC=Interest paid-Net new borrowings

To derive CFC during 2018, information from both the income statement and the pair of balance sheets is necessary. The statement of financial performance, or simply income statement, reported $6 million of total interest expenses. As of December 31, 2018, JJJ Corporation did not have unpaid interest expenses (see the 2018 statement of financial position or balance sheet). Therefore, the total

The goal for this Week 5 Activity is to estimate the future cash fl...