Answers are in red

Unsure about the answer to the question in the comments. The answers are given in red so whatever that should match it I guess.

You have been asked to examine a valuation done of Jorgen Construction, a real estate and construction company. You have been provided with the latest income statement: Revenues - Operating Expenses - Depreciation & Amortization EBIT $ 1000 million $ 700 million $ 100 million $ 200 million In the valuation, the analyst has assumed a growth rate of 5% forever in revenues, operating income, and depreciation. The analyst has assumed capital expenditures of $ 160 million (for next year). In addition, the analyst has assumed that non-cash working capital will be 26% of the change in revenues. (Tax rate = 20%)s a) Estimate the expected free cash flows to the firm next year, based upon the assumptions listed above. Compute also the reinvestment amount (in dollar terms). (3 marks) Change in noncash WC = 13 Reinvestment amount: 68 b) What is the return on capital being assumed in perpetuity by the analyst? (2 marks) ROC = 12.35% c) You believe that this firm is in a competitive business and will earn a return on capital equal to its cost of capital (which is equal to 10%). What is the correct value of the firm assuming that the stable growth rate of 5% remains unchanged? (5 marks) Firm Value = 1680 You have been asked to examine a valuation done of Jorgen Construction, a real estate and construction company. You have been provided with the latest income statement: Revenues - Operating Expenses - Depreciation & Amortization EBIT $ 1000 million $ 700 million $ 100 million $ 200 million In the valuation, the analyst has assumed a growth rate of 5% forever in revenues, operating income, and depreciation. The analyst has assumed capital expenditures of $ 160 million (for next year). In addition, the analyst has assumed that non-cash working capital will be 26% of the change in revenues. (Tax rate = 20%)s a) Estimate the expected free cash flows to the firm next year, based upon the assumptions listed above. Compute also the reinvestment amount (in dollar terms). (3 marks) Change in noncash WC = 13 Reinvestment amount: 68 b) What is the return on capital being assumed in perpetuity by the analyst? (2 marks) ROC = 12.35% c) You believe that this firm is in a competitive business and will earn a return on capital equal to its cost of capital (which is equal to 10%). What is the correct value of the firm assuming that the stable growth rate of 5% remains unchanged? (5 marks) Firm Value = 1680