0 240 FCF Forecast (5 million) Year 1 2 3 4 Sales 270 290 310 325,5 Growth versus Prior Year 125% 7.4% 6.9% 5.0% EBIT (10% of Sales) 27.00 29.00 31.00 32.55 Less: Income Tax (37%) (9.99) 10.73 11.47 12.44 Less: Increase in NWC (12% of Change in Sales) 3.6 24 24 1.86 Free Cash Flow 13 41 15.87 17.13 18 65 Banco Industries expect sales to grow at a rapid rate over the next 3 years, but settle to an industry growth rate of 6% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industnes. Banco industries has a weighted average cost of capital of 13%, $50 million in cash, $80 million in debt, and 18 million shares outstanding. If Banco Industries can reduce their operating expenses so that EBIT becomes 12% of sales, by how much will their stock price increase? A $2.73 B: $3.28 C. $8 19 OD. $4.78