1. Use free cash flow valuation to find the share price of the stock. Assume that free cash flows after year 3 grow at a constant rate of 5 percent a year indefinitely. The company has no preferred stock. Figures in millions 3 Year 0 $112 13 EBIT* Depreciation Net capital expenditures Total net working capital (NWC) $100 10 30 10 $120 14 40 13 35 11 $7 $200 Value of total debt Tax rate = 25% Number of shares outstanding = 15 *EBIT = Earnings before interest and taxes = Revenues - Total costs - Depreciation Use information below to find the firm's required rate of return or weighted average cost of capital Long-term bond rate i.e., risk-free rate) = 5 percent Market risk premium = 6 percent Beta of stock is 1.50 Before-tax cost of debt = 8 percent Debt-to-equity ratio=0.60 Tax rate = 25 percent