For simplicity, assume that all debt financing for each year is raised at the beginning of the year such that beginning-of-year debt and average debt are the same.

2.9 The holding company 3DS is considering a 35% carve-out of its retail unit, the Storr Family Stores. Your task is to estimate the share price 3DS may be able to get for Storr as of January 1, 2008. You have available the following operating projections:

Storr Unit, 2008–2012 Projections (million $)

2008 2009 2010 2011 2012 Sales 4,700.5 4,935.5 5,182.3 5,441.4 5,713.5 Cost of sales∗ 72.5% 72.5% 72.5% 72.5% 72.5%

Operating expenses 26.9% 26.8% 26.7% 26.6% 26.6%

Depreciation 30.6 36.2 40.9 42.1 37.0 Increase in deferred taxes 2.1 2.2 2.3 2.3 2.3 Capex + NWC increases 45.0 49.5 50.0 45.0 40.0

∗ Includes depreciation