6.) Thai Union Foods Co. Ltd. is a Thai seafood exporter. Following is the company's forecasted cash flow for its new processing plant over the next two years.

			2008	2009
			Mln baht	mln baht)
Sales			50	70
Cost of Sales			30	40
Depreciation			5	10
Tax			4.5	6
Investment in fixed Assets			5	6
Investment in working Capital			2	2

a). Please calculate the free cash flow of Thai Union's new plant in 2008 and 2009.

b). Thai Union has a bond that will expire in 2 years and pay a coupon rate of 8 percent

every six months. The bond which has a face value of 1,000 baht is traded at 964.5

baht. What is the company's cost of debt?

c). The company views it has the same business risk as the industry. The index of seafood

companies on the Stock Exchange of Thailand has beta of 2 relative to the SET Index. The

government's two-year bond is traded at a yield of 8 percent. The market risk premium in

Thailand is 6 percent. What is the company's cost of equity?

d). The company pays corporate income tax of 30 percent. It has debt of 40 million baht and

shareholders' equity of 60 million baht. What is the company's weighted average cost of

capital?

e). The company assumes that its free cash flow will rise at a constant rate of 2 percent after

2009. What is the horizon value of Thai Union free cash flow in 2009 at the

year of 2007?