Cherry Street Financial, Inc., a privately held investment company, is interested in knowing the

value of its stock on a per share basis. It currently has $10$ million shares outstanding. The firm

also has $$50$ million in debt outstanding and a marginal tax rate of $40\%.$ It estimates it has a

WACC of $12\%.$

Cherry Street Financial, Inc Financial Forecast

a$.$ If you assume that the free cash flow to the firm levels off and grows at a constant rate

of $5\%$ per year after $2022,$ calculate the per share value of Cherry Street Financial.

b$.$ Cherry Street Financial believes that their constant growth rate will be $8\%$ per year after

$2022,$ calculate the per share value with this assumption

c$.$ Pro forma expectations for Oak Street Capital $($a competitor$)$ suggest that it will trade at

a MV$/$EBIT multiple of $15$ in $2022.$ Using this information to estimate your terminal

value, calculate the per share value of Cherry Street Financial.

d$.$ Based on your research, the industry MV$/$EBIT multiple $=5.$ Calculate the per share

value of Cherry Street Financial stock with this revised MV$/$EBIT$.$