3. The following is a five-year discounted cash flow (DCF) forecast for Middlestates Electric, Inc., an electric utility company Year 5 2,615 937 (SMM) Year 1 Operating income 2,039 Taxes 712 Depreciation and amortization 1.299 Change in working capital (169) Capital expenditures/asset sales (1.754) Free cash flow 703 Year 2 2.325 813 1.413 294 (3,432) (213) Year 3 2,169 777 1.470 (223) 1,180 3,819 Year 4 2,430 870 1,527 163 (2.720) 530 1,584 (205) (2.133) 924 Cash flows over the next five years are expected to fluctuate significantly due to key acquisitions and restructuring measures planned by Middlestates. After the fifth year, however, cash flow is expected to stabilize, Economists expect the long-term inflation rate to stabilize at 1.5 percent, and Middlestates expects real growth in sales to be 1.5 percent or less. Management has determined that the cost of capital is 9:28 percent. (20%) Estimate Middlestates' enterprise value