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F&F is a retail chain selling furniture. The firm has after-tax operating income of $500 million in the current year on revenues of $6 billion.

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F&F is a retail chain selling furniture. The firm has after-tax operating income of $500 million in the current year on revenues of $6 billion. The firm also has non-cash working capital balance of $1 billion. The net capital expenditures this year is $250 million and expects revenues, operating income and net capital expenditures, and operating working capital to grow 6% a year forever. The firm's cost of capital is 12%. Assume that the firm adopt a new plan that will reduce its non-cash working capital requirement by 50%. But as a consequence of this non-cash working capital change, earnings growth declines to 4.2%, 1. what is the value of the firm before the new plan is adopted? 2. What is the value of the firm after the new plan is adopted

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