1. (FCFE valuation model) From the text, FCFF = EBIT(1-t) + Dep Capex InvWC, and FCFE = FCFF Int(1-t) + net borrowing. Or FCFE = EBIT(1-t) + Dep Capex InvWC Int(1-t) + net borrowing. Since EBIT(1-t) Int(1-t) = NI, we can use FCFE = NI + Dep Capex InvWC + net borrowing.

Value the shares of Moose Service Co. The modeling assumptions are:

• Current sales are $60 million. They will grow at 30% annually for the first four years, and then grow at 6% annually thereafter.
• Net income will be 10% of sales.
• The net investment in fixed capital (Capex Depr) will be 50% of the sales increase each year
• The investment in working capital will be 10% of the sales increase.
• Debt financing will be 40% of the net investments in fixed capital and working capital each year
• The required rate of return for equity is 11%.
• There are 2 million outstanding shares.

What is the intrinsic value per share of Moose Service?

Please update sheet with formula!