Answer with Excel or Handwritten Finance Question. You are trying to value some shares of stock of an electronics company that you recently inherited. You have looked up its recent financial statements, and found that the company had revenue last year (2019) of $500M, cost of goods sold (COGS) of $320M, and SG&A expenses of $100M. These expenses do not include depreciation, which was $20M. The balance sheet amount of net working capital was $150M at year end 2019. The company faces a tax rate of 20% and has debt outstanding worth $50M. There are 20M shares outstanding.

a. You believe the companys revenue will increase by 5% this year, that all of its expenses (COGS, SG&A, and Depreciation) will stay at the same percentage of revenue in 2020 as they were in 2019, that Net Working Capital will grow by 5% in 2020, and that capital expenditures will equal 6% of 2020 sales. What is your estimate of the companys 2020 Free Cash Flow?

b. If you expect the companys free cash flow to grow at a rate of 3% forever after 2020, what is your estimate of the current value of a share of the companys stock (as of January 1, 2020) if the appropriate discount rate is 10%? (Note: assume the 2019 Free Cash Flow was already paid out to investors)