9. We find the following information on NPNG (No-Pain-No-Gain) Inc.:

EBIT = $2,000,000 Depreciation = $250,000 Change in net working capital = $100,000 Net capital spending = $300,000

These numbers are projected to increase at the following supernormal rates for the next three years, and 5% after the third year for the foreseeable future:

EBIT: 20% Depreciation: 10% Change in net working capital: 15% Net capital spending: 10%

The firms tax rate is 35%, and it has 1,000,000 outstanding shares and $8,000,000 in debt. We have estimated the WACC to be 15%. (18 marks)

1. Calculate the EBIT, Depreciation, Changes in NWC, and net capital spending for the next four years. (8 marks)
2. Calculate the CFA* for each of the next four years, using the formula

CFA* = EBIT(1 T) + Depr NWC NCS. (4 marks)

3. Calculate the firms share price at time 0. (6 marks)