34. MajorMinor has net debt of $100 million and 10 million shares outstanding. The company will have EBIT next year, after CCA expense, of $200 million that is not growing and pays 25% tax. CCA expenses are steady at $30 million/year and the managers have stopped making capital expenditures. MajorMinor is reducing inventory to try to run a leaner operation. Inventory is shrinking by $10 million/year. These cash flows are steady for the next 3 years, then the company will try to get acquired for cash (at the end of year 3) for 3-times-EBIT and this will not be taxed. Use an appropriate discount rate of 5% to discount the FCFs and future acquisition value. What is the free cash flow in year 2? a. $190 b. $170 c. $200 d. $180 35. From the above question, what is the value of the shares today? a. $91.30 b. $93.57 c. $83.45 d. $89.76

Please solve Q#35