Consider a company which annual sales are currently at $400\mathrm{.}000$ TL$.$The company is expected to grow at $25\%$ in the next $3$ years and at $6\%$ indefinitely thereafter. The company manages to achieve a $35\%$ EBIT margin$($out of sales$)$ on average.The required Working Capital is assumed to be at $3\%$ of the sales. Investment in fixed assets is going to be the same amount in the first $3$ years,$2\%$ of the current fixed assets.Also,the depreciation expense will be at $30\%$ of investment in the fixed assets.The growth in CAPEX and Depreciation after the $3$rd year will be the same as that of the company.Corporate Tax rate is $25\%.$ The cost of capital for the company is estimated to be $10\%.$The number of shares outstanding is $100\mathrm{.}000$ TL$.$The current share price of the company is $15$ TL$.$

COMPANY BALANCE SHEET

CURRENT ASSETS

CASH:$350\mathrm{.}000$ INVENTORY:$400\mathrm{.}000$ A$/$R: $250\mathrm{.}000$

FIXED ASSETS$($TL$)$:$3\mathrm{.}000\mathrm{.}000$

CURRENT LIABILITIES

A$/$P:$200\mathrm{.}000$ SHORT TERM FINAL DEBT:$300\mathrm{.}000$ LONG TERM FINAL DEBT:$2\mathrm{.}000\mathrm{.}000$ SHAREHOLDERS EQU$$TY:$1\mathrm{.}500\mathrm{.}000$

PEER INFORMATION

COMPANY EV$/$SALES EV$/$EBITDA P$/$B

PEER$19221$

PEER$28181\mathrm{.}5$

PEER$311171\mathrm{.}6$

PEER$410141\mathrm{.}2$

PEER$510132\mathrm{.}4$

QUESTION $1-$ Calculate the free cash flows for the first $3$ years.

QUESTION $2-$ Calculate the terminal $($horizon$)$ value of the company.

QUESTION $3-$ Calculate the DCF and then the market value of the equity of the company

QUESTION $4-$ Use the peer companies information to calculate the market value of the equity$($use the median as a measure for the average of the multiples$)$

QUESTION $5-$ Use the equally weighted $(50\%-50\%)$ Blended Approach to calculate the share price of the company.What is recommendation for the stock?