1) Sun Devil Inc. completed another successful year along with its initial public offering (IPO). The Company earned net income (NI) of $40 million that included operating income (OI) of $45 million. During the year, Sun Devil completed its initial public offering of $250 with no selling shareholders bring its common stock equity (CSE) balance at year-end to $400 million. A portion of the IPO proceeds were used to fund the increase of net operating assets (NOA) from $350 million at the beginning of the year to $500 million as of the end of the year. The remaining IPO proceeds were held as financial assets. As a result, the net financial obligations (NFO) decreased during the year. Sun Devil does not pay a dividend nor did it buyback any outstanding shares. However, Sun Devil received $5 million from the exercise of employee stock options. (please show your work for each section)
a. What is net financial expense (NFE) for the year?
b. What are free cash flows for the year?
c. What is the amount of decrease in net financial obligations during the year?