$6$ J$.$ Clark InC. $($JCI$),$ a manufacturer and distributer of sports equipment, has grown until it has become a stable, mature company. Now

$7JCl$ is planning its first distribution to shareholders. Shown below are the most recent year's financial statements and projections for

$8$ the next year, $2024($JCI has a fiscal year ending on Jupe $30).$ JCI plans to liquidate $$500$ million of its short$-$term securities and

$9$ distribute them on July $1,2024,$ the first day of the next fiscal year, but has not yet decided whether to distribute with dividends or with

$10$ stock repurchases.C$.$ Caculate JCls projected free cash flow; the tax rate is $25\%.$

Projected

Calculation of

Free Cash

Flow

$6/30/2023$

$\frac{6}{30}\frac{?}{2024}$

Operating current assets

Operating current liabilities

Net operating working capital

Net plant & equipment

Total net operating capital

$$15,160\mathrm{.}00$

Net operating profit after taxes

Inv. in operating capital

Free cash flow $($FCF$)$

c$.$ Caculate JCI's horizon value for $6/30/2024.$ FCF is expected to grow at a constant rate of $6\%$ and JCP$\text{'}$s WACC is $11\%.$

Calculate JCI's value of operations for $6/30/2023$ and $6/30/2024.($Hint: JCI's value of operations on $6/30/2024$ is equal to

the horizon value.$)$

Valuation

Horizon value

Value of operations

d$.$ What is JCT$\text{'}$s current intrinsic stock price $($the price on $\frac{6}{30}\frac{?}{2023})?$ What is the projected intrinsic stock price for

$886/30/2024?$

See below for

What is the projected intrinsic stock price on $7/1/2024$ if JCl distributes the cash as dividends?

Ste below for

$91$ calculations.

$921$: What is the projected intrinsic stock price on $7/1/2024$ if JCI distributes the cash athrough stock repurchases? How

$95$ Jhaty shares will remain outstanding after the repurchase?

See below for

calculations.