Final answer:
The average annual expected growth rate in Net Income between 2022 and 2026 can be calculated using the Gordon Growth Model. Net Income in 2024 is expected to be calculated based on the average annual expected growth rate and the previous year's Net Income. The Change in Net Working Capital in year 2023 can be determined by analyzing the company's current assets and liabilities and comparing them to the previous year's values.
Step-by-step explanation:
To calculate the average annual expected growth rate in Net Income between 2022 and 2026, we can use the Gordon Growth Model. The Gordon Growth Model is a financial model used to estimate the intrinsic value of a stock based on the expected dividends and the required rate of return.
The formula for the Gordon Growth Model is:
Net Incomet = Net Incomet-1 * (1 + g)
Where:
- Net Incomet is the Net Income in year t
- Net Incomet-1 is the Net Income in the previous year (t-1)
- g is the average annual expected growth rate in Net Income
Using the given information, we can calculate the average annual expected growth rate as follows:
Net Income2022 = Net Income2021 * (1 + g)
Net Income2023 = Net Income2022 * (1 + g)
Net Income2024 = Net Income2023 * (1 + g)
Net Income2025 = Net Income2024 * (1 + g)
Net Income2026 = Net Income2025 * (1 + g)
By rearranging the formula, we can solve for the average annual expected growth rate:
g = (Net Income2026 / Net Income2021)^(1/5) - 1
Now, let's calculate the average annual expected growth rate:
Net Income2026 = Net Income2025 * (1 + g)
Net Income2025 = Net Income2024 * (1 + g)
Net Income2024 = Net Income2023 * (1 + g)
Net Income2023 = Net Income2022 * (1 + g)
Net Income2022 = Net Income2021 * (1 + g)
Substituting the values, we get:
Net Income2026 = Net Income2021 * (1 + g)^5
Solving for g, we have:
g = (Net Income2026 / Net Income2021)^(1/5) - 1
Now, let's calculate the average annual expected growth rate using the given values:
Net Income2026 = Net Income in 2024 * (1 + g)
Net Income2021 = Net Income in 2021
Substituting the values, we get:
g = (Net Income in 2024 / Net Income in 2021)^(1/5) - 1
Therefore, the average annual expected growth rate in Net Income between 2022 and 2026 can be calculated using the given values.
Net Income in 2024 is expected to be calculated based on the average annual expected growth rate and the previous year's Net Income.
The Change in Net Working Capital in year 2023 can be determined by analyzing the company's current assets and liabilities and comparing them to the previous year's values.