5. Actual Forecast ($ millions) year 0 year 1 Sales $ 600 650 Operating Costs 300 325 EBIT 300 325 Interest Expense 20 20 EBT 280 305 Taxes (25%) 70 76 Net Income $ 210 229 Dividends 200 200 Add to RE 10 29 Balance Sheet Cash $ 10 13 Receivables 100 105 Inventories 100 105 Current Assets 210 222 Net Fixed Assets 150 180 Total Assets 360 402 Accounts Payable 40 50 Notes Payable 10 10 Accruals 30 30 Current Liabilities 80 90 Bonds 50 53 Common Stock 100 100 Retained Earnings 130 159 Total Liab & Eq $ 360 402 a. Assume the WACC= 10% and growth rate of 5% after year 1. Find FCF for year 1. Tax rate = 25% b. Find the horizon value of FCFs after year 1 and the value of the corporate using the corporate value method. Find the market value of the common stock assuming the book value of debt equals the market value.