1. Calculate Summit's free cash flow in 2022.

2. Summit Energys beta is 1.7. Calculate its expected rate of return if the market portfolio return is 12% and the risk free rate is 4% .

3. Calculate Summits terminal value if free cash flows are expected to grow 2% perpetually starting 2023. Use its expected rate of return from question 2 as a discount rate.

4. Calculate Summits NPV as of 2020. Use its expected rate of return from question 2 as a discount rate.

Summit Energy is an alternative energy producer. Your hedge fund is interested in investing into the company. As an analyst, you need to estimate firm value and its price per share using the NPV method and report it to the energy portfolio manager. So far you've partially forecasted its earnings for 2020-2022 (numbers are in millions). Revenues Cost of goods sold Gross Profit Actual earnings 2017 2018 2019 25,137 25,650 24,368 18,375 17,894 19,750 6,762 7,756 4,618 2,235 2,110 2,050 2,000 2,000 2,000 Forecasted earnings 2020 2021 2022 25,220 26,481 26,746 21,230 20,381 19,973 3,990 6,101 6,773 2,200 2,200 2,200 2,000 2,000 2,000 SG&A Depreciation EBIT Tax expense (25%) Net income Assume that annual net working capital represents 10% of revenues. In 2021 Summit plans to purchase new equipment for its new generation of wind mills for $200 million. No other purchases are planned in 2020 or 2022