0 Sora Industries has 65 million outstanding shares. $129 million in debt, $57 million in cash, and the following projected free cash flow for the next four years: Year 0 1 2 3 4 Earnings and FCF Forecast ($ million) 1 Sales 433.0 468.0 516.0 547.0 574.3 2 Growth vs. Prior Year 8.1% 10.3% 6.0% 5.0% 3 Cost of Goods Sold (313.6) (345.7) (366.5) (384.8) 4 Gross Profit 154.4 170.3 180.5 189.5 5 Selling, General, & Admin (93.6) (103.2) (109.4) (114.9) 6 Depreciation (7.0) (7.5) (9.0) (9.5) 7 EBIT 53.8 59.6 62.1 65.2 8 Less: Income Tax at 40% (21.5) (23.8) (24.8) (26.1) 9 Plus: Depreciation 7.0 7.5 9.0 9.5 10 Less: Capital Expenditures (7.7) (10,0) (9.9) (10.4) 11 Less: Increase in NWC (6.3) (8.6) (56) (4.9) 12 Free Cash Flow 25.3 24.6 30.8 33.3 a. Suppose Sora's revenue and free cash flow are expected to grow at a 3.1% rate beyond year four. If Sora's weighted average cost of capital is 12.0%, what b. Sora's cost of goods sold was assumed to be 67% of sales, Wits cost of goods sold is actually 70% of sales, how would the estimate of the stock's value cha c. Return to the assumptions of part (a) and suppose Sora can maintain its cost of goods sold at 67% of sales. However, the firm reduces its selling, general, a stock price would you estimate now? (Assume no other expenses, except taxes, are affected.) d. Sora's net working capital needs were estimated to be 18% of sales (their current level in year zero) | Sora can reduce this requirement to 12% of sales sta do you estimate for Sora? (Hint: This change will have the largest impact on Sora's free cash flow in year 1.) a. Suppose Sora's revenue and free cash flow are expected to grow at a 3.1% rate beyond year four. If Sora's weighted average cost of capital is 12.0%, what 12 Free Cash Flow 246 30.8 383 . Suppose son's revenue and tree cash flow are expected to grow at 3.1% rate beyond your four Sow's weighted average cost of capitals 120%, what is the value of Sora teck besed on this information? b. Sora's cost of goods sold was awed to 67% of sales is cost of goods sold is actually 70% of how would the state of the stock's value change? c. Return to the assumptions of partland supporti cont of goods sold 67% of However, the firm reducing and admitive expenses from 20% of salt 10% of salesWul stock price would you were the perfected 4. Sve working as well to be 10% of the current level in yol or reducerea ingin year but there are sin what och price on your site for at Thing we have the impact on Show in ye 1