2) Use the following historical (2012) and projected (2013, 2014 and 2015) financial statement information to answer this problem. EBIT Tax Rate Required Level of NOWC Required Level of Net PPE 2012 $131.0 40% $280.0 $590.0 2013 $137.6 40% $294.0 $619.5 2014 $144.4 40% $308.7 $650.5 2015 $151.6 40% $324.1 $683.0 a. Find the projected FCF for 2013, 2014 and 2015. b. Assuming FCF continues to grow at 5% after 2015 and the WACC is 10.5%, what is the Horizon (Terminal) Value at the end of 2015? C. Based on the same assumptions in b, what is the Value of the Firm as of the end of 2012 assuming there are no marketable securities held by the firm? 3) Suppose a 3-month Treasury Note has a holding period return, or (T), of 1.5%. a. What is the APR? b. What is the EAR? C. If instead of a 3-month maturity, assume that T is now incredibly small and 1/T goes to infinity. What is EAR in this scenario? 4) Assume the following: Realized risk-free rate, 11 = 3% Realized return of the market, m = 11% Beta for Stocki, B = 0.90 Realized return for Stock i over the entire year is 10% (i.e. g = 10%) . . At the end of the year, what is the stock's realized alpha, a? (i.e. return above or below what CAPM anticipated) What does this tell you about the impact on stock I's value resulting from managerial actions and/or other firm-specific events? 5) Suppose you are trying to determine the impact of news that a settlement has been reached in a lawsuit against GE. Based on the past 250 days and using CAPM, you have estimated that the annual alpha (a) is 0.8% and beta (B) is 1.1. It is known that the annual risk-free rate is 3% and the annual market return is 12%. If over a three day window (-1.+1) around the release of this news the stock jumped 9%, what is GE's cumulative abnormal return