Homework: HW 9.5 Save 1 1 ( 1 of 1 (1 complet) HW Score: 0%, 0 of 1 pt Score: 0 of 1 pt X P9-21 (similar to) Question Help Sora Industries has 62 million outstanding shares. $121 milion in debt, $!9 million in cash, and the following projected free cash flow for the next four years : a. Suppose Sore's revenue and free cash flow are expected to grow at a 3.2% rate beyond year 1. If Sora's weighted average cost of capital is 13.0%, what is the value of Sora's stock based on this information? b. Sora's cost of goods sold was assumed 10 be 67% of sales ? A cost of goods sold is actually 70% of so, ho would the case Saranduces its selling general and administrative anses from 20% af salgs to 16 sales. What shock price would you estimate now? . % . , % of (Assure to other expenses, except laxes, are affected.) d. Sore's networking capital needs were estimated to be 18% of sales which is their current level in year 1. If Sora can reduce this requirement to 12% of sales starting in year 1, but all other assumptions remain as in partial, what stock price do you estimate for Sora? (Hint. This change will have the largest impact on Sore's tree cash flow in year 1.) hted average cost of capital is 13.0%, what is the value of Sorale stock based on this information? A Data Table (Click on the following loon In order to copy its contents into a spreadsheet Year 0 1 2 3 4 Earnings & FCF Forecast (8 million) 1 Sales | 433.0 460.0 5160 547.0 574.3 2 Greuth vs. Prior Yaar 9.1% 10.355 6.17% 5.0% 3 Cast of Goods Sold (313.6) (346.71 (866.6) (344) 4 Gross Profit 154.4 170.3 180.5 189.5 5 Seling, Gioneral & Admin (93.6) (103.2) (109.4) (114.9) 6 Depreciation (7.0) 17.51 (8.0) (9.5) 7 EBIT 12.1 65. 8 Lese: Income tax et 40% (21.5) (23.81 124.8) (26.1) 9 Plus. Depreciation 7.0 7.5 9.0 3.5 10 Less: Capital Experditures (7.7) (10.0 (9.9) (104) 11 Less: Increases in NWC (6.3) fa.6) (5.6) (4.9) 12 Free Cash Flow 25.3 24.8 30.8 33.3 Print Done Homework: HW 9.5 Save 1 1 ( 1 of 1 (1 complet) HW Score: 0%, 0 of 1 pt Score: 0 of 1 pt X P9-21 (similar to) Question Help Sora Industries has 62 million outstanding shares. $121 milion in debt, $!9 million in cash, and the following projected free cash flow for the next four years : a. Suppose Sore's revenue and free cash flow are expected to grow at a 3.2% rate beyond year 1. If Sora's weighted average cost of capital is 13.0%, what is the value of Sora's stock based on this information? b. Sora's cost of goods sold was assumed 10 be 67% of sales ? A cost of goods sold is actually 70% of so, ho would the case Saranduces its selling general and administrative anses from 20% af salgs to 16 sales. What shock price would you estimate now? . % . , % of (Assure to other expenses, except laxes, are affected.) d. Sore's networking capital needs were estimated to be 18% of sales which is their current level in year 1. If Sora can reduce this requirement to 12% of sales starting in year 1, but all other assumptions remain as in partial, what stock price do you estimate for Sora? (Hint. This change will have the largest impact on Sore's tree cash flow in year 1.) hted average cost of capital is 13.0%, what is the value of Sorale stock based on this information? A Data Table (Click on the following loon In order to copy its contents into a spreadsheet Year 0 1 2 3 4 Earnings & FCF Forecast (8 million) 1 Sales | 433.0 460.0 5160 547.0 574.3 2 Greuth vs. Prior Yaar 9.1% 10.355 6.17% 5.0% 3 Cast of Goods Sold (313.6) (346.71 (866.6) (344) 4 Gross Profit 154.4 170.3 180.5 189.5 5 Seling, Gioneral & Admin (93.6) (103.2) (109.4) (114.9) 6 Depreciation (7.0) 17.51 (8.0) (9.5) 7 EBIT 12.1 65. 8 Lese: Income tax et 40% (21.5) (23.81 124.8) (26.1) 9 Plus. Depreciation 7.0 7.5 9.0 3.5 10 Less: Capital Experditures (7.7) (10.0 (9.9) (104) 11 Less: Increases in NWC (6.3) fa.6) (5.6) (4.9) 12 Free Cash Flow 25.3 24.8 30.8 33.3 Print Done