Can I please get some assistance with these questions?

Hugo Boss AG is a German designer, manufacturer and distributor of men's and women's clothing, operating in

the higher end of the clothing retail industry. During the period 2001-2008, the company consistently earned

returns on equity in excess of 18 percent, grew its book value of equity (before special dividends) by 5.5 percent

per year, on average, and paid out 65-70 percent of its net profit as dividends. In 2008, the company paid out a

special dividend of 345.1 million. Consequently, the company's book value of equity decreased from 546.8 million in 2007 to 199.0 million in 2008.

On April 1, 2009, one month before the publication of the first-quarter results, when Hugo Boss's 70.4 million

common shares trade at about 11 per share, an analyst produces the following forecasts for Hugo Boss.

Income statement ( millions)2009E2010E2011E

Sales1548.11493.91561.2

Gross profit897.9875.1923.7

EBIT179.6176.9196.2

Interest expense(45)(40)(35)

EBT134.6136.9161.2

Tax expense(36.3)(37)(43.5)

Net profit98.399.9117.7

Balance sheet ( millions)2008R2009E2010E2011E

Total non-current assets 459.2 480.8 499.1 512.0

Inventories 381.4 325.1 304.3 305.3

Trade receivables 201.0 175.4 160.8 156.1

Cash and cash equivalents 24.6 33.5 32.5 47.2

Other current assets 95.4 136.5 172.5 203.2

Total current assets 702.4 670.5 670.1 711.8

Shareholders' equity 199.0 200.2 221.6 259.0

Non-current provisions 27.9 25.6 24.725.8

Non-current debt 588.5 576.7 565.2 553.9

Other non-current liabilities (noninterest

bearing) 26.7 24.5 23.6 24.8

Deferred tax liabilities 17.9 18.3 18.7 19.0

Total non-current liabilities 661.0 645.1 632.2 623.5

Current provisions 59.3 59.3 59.3 59.3

Current debt 40.2 40.2 40.2 40.2

Other current liabilities 202.1 206.5 215.9 241.8

Total current liabilities 301.6 306.0 315.4 341.3

TOTAL EQUITY AND LIABILITIES 1161.6 1151.3 1169.2 1223.8

Assume that Hugo Boss's cost of equity equals 12 percent.

1. Calculate free cash flow to equity, abnormal earnings and abnormal earnings growth for the years 2009-2011.
2. Assume that in 2012 Hugo Boss AG liquidates all assets at their book values, uses the proceeds to pay off debt and pays out the remainder to its equity holders. What does the assumption imply about the company's

1. Free cash flow holders in 2012 and beyond?
2. Abnormal earnings in 2012 and beyond?
3. Abnormal earnings growth in 2012 and beyond?

1. Estimate the value of Hugo Boss's equity on April 1, 2009, using the above forecast and assumptions. Check that the discounted cash flow model, the abnormal earnings model, and the abnormal earnings growth model yield the same outcome.
2. The analyst estimates a target price of Euro 20 per share. What is the expected value of Hugo Boss's equity and the end of 2011 that is implicit in the analysts' forecast and target price?
3. Under the assumption that the historical trends in the company's ROE (i.e., approximately 18 percent), payout ratio (70 percent) and book value growth (5.5 percent) continue in the future, what would be your estimate of Hugo Boss's equity value-to-book ratio before the company paid out its special dividends? How does the special dividend payment change your estimate of the equity value-to-book ratio?