An asset manager is valuing the listed company EVORA with expected year-on-year growth rate of EBIT as given in Table 1. Year 1 is the companys first year of activity.

Table 1 Year 2	Year 3	Year 4	Year 5
+2%	+6%	+5%	+2%

how to compute sales????

The EBIT margin (as percentage of sales) is expected to grow 55 basis points (0.55%) per year between year 2 and year 5. In year 1, the expected level of sales is 67,000 with EBIT margin of 6%. Additional assumptions are:

• Depreciation: 5% of sales, all years
• Recurrent Capex: 7% of sales for year 1, with percentage decreasing 45 basis points per year until year 4
• Change in working capital: 12% of yearly changes of EBIT
• Tax rate: 20%
• Target capital structure: debt/(debt + equity) ratio of 55%
• Asset beta: 1.35
• Risk-free rate: 3%
• Equity risk premium: 6%
• Debt spread: 4%

To answer the following questions, make plausible assumptions if necessary.

1. a. Compute the Free Cash Flows to the Firm (FCF) for the period from year 1 until year 5, including year 5. Round your computations to zero decimal places. Explain your answer.