AMERICANHOMEPRODUCTSSUGGESTEDSOLUTION1.EstimateFCF96.CashFlowsfromOp.2,398NetInt.Expense(AT)(rate=35%)281AdjustedCashFlowsfromOp.2,679CashUsedforInv.Act.<503>AdjustforsaleofM/S<114>a)NetFCF2,062ThissolutionassumesCashandEquivalentsarenotpartofoperations.Removingthisassumptionrequirestwoadjustments:Add:DecreaseinCash480Add:Interestearned,5%x.6551onaveragebalance1,562b)NetFCF2,5932.ReconcilewithFinancialActivities.Solutiona)NetInt.Exp.(AT)281ProceedsfromSaleofM/S<114>Repaym.ofDebt.1,784Div=s.994Purch.ofT/S11IssueofStock,Options<412>ExchangerateEffect<1>DecreaseinCash<480>FCF2,063(roundingerrorof1)Solutionb)Sameasabove,exceptfor(i)ChangeNetInt.Exp.(AT)to281+51=332(ii)EliminateDecreaseinCash(480)3.EstimateΔNOA.ThebasicrelationFCF=Op.Earn(AT)-ΔNOAstillapplies!Solutiona)impliesNetIncome1,883NetInterestExpense(AT)281Op.Earn.(AT)2,164FCF<2,062>ΔNOA102Solutionb)impliesNetIncome1,883NetInt.Exp.(AT)332Op.Earn.(AT)2,215FCF<2,593>ΔNOA<378>Remark:Youmayprovidemoredetailasfollows.Considersolutiona)Op.Earn.(AT)2,164*Add:Non-CashCharges,Net545**Deduct:IncreaseinWork.Cap.<30>Deduct:Cap.Expendituresplus<617>NetAcquisitions(503+114)FCF2,062*Includes:GainsonsalesofbusinessesRestructuringandspecialchargesGainsonsalesofotherassetsDepreciationAmortizationDeferredIncomeTaxes**Includes:ΔA/RΔInv.ΔOthercurrentassetsΔTradeaccountspayableΔAccrualtaxesOtherIntermsofsolutionb)(i)ChangeOp.Earn.(AT)to2,215(ii)ChangeIncreaseinWorkingCapital30toDecreaseinWorkingCapital<30>+480=450