1. Visionworks operates retail sunglass kiosks in shopping malls. Below is information related to the company at the end of each year: (dollar amounts in thousands) Net Cash Flow from Operations 2012 569 2013 2014 2015 2016 2017 645 856 1,008 1,435 1,565 Interest Expense after tax 118 135 150 145 165 158 Interest Income after tax 18 15 20 15 20 18 Cash as on Balance Sheet (2011 Cash = 300 344 382 420 487 539 235) (Increase) Decrease in PPE -287 -300 -310 -285 -294 -277 (Increase) Decrease in Intangible Assets -56 -64 -64 -72 -78 -87 (Increase) Decrease in Other Assets -10 -12 -11 -10 -8 -8 (Increase) Decrease in Sinking Fund for -80 -80 -80 -80 -80 -80 Bond Payments Increase (Decrease) in Short-Term Debt 205 208 160 75 -60 -56 Increase (Decrease) in Long-Term Debt Common Shares Outstanding -300 -300 -300 -350 -350 -350 1,550 in thousands Required: a. Using the above information and the Assumptions below, calculate Visionworks current value per share at the end of 2011, using free cash flows to equity AND free cash flows to all debt and equity stakeholders. (Note: Values from the two methods can be quite different). b. Assuming you are estimating value per share using free cash flows to equity, reverse engineer the implicit growth rate in a value per share of $12, all other things remaining equal. Assumptions: Assume an equity beta of 1, risk premium of 5% and a risk-free rate of 3.5%. Assume a WACC of 6%. Assume steady-state growth after 2016 will be 4%. Assume MV of Debt to be 36,000 in 2011. Assume the interest income is not related to the financing of the company. Adjust for mid-year discounting.