A) Suppose that this firm is projected to have after-tax net income of $18 million next year with a depreciation expense of $6 million, $5 million in capital expenditures, and a $1 million increase in net working capital. What is the firms free cash flow next year? If this free cash flow is expected to grow by 15%, 12%, and 10% in years 2-4, respectively, what is the present value of the firms operations in years 1-4?

B) After the year 4, the firms cash flows are expected to grow at a constant rate of 3% in perpetuity. Find this horizon value for the firm. The horizon value is the present value of all of the firms cash flows starting in year 5. Make sure to find the present value of this at year zero.

C) Assume that this firm also has $5 million of cash on its balance sheet. This simply adds $5 million to the total value of the firm. What is the total value of the company you are considering acquiring? What is the value of their equity, and the value of their debt?