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I would really appreciated detailed help with these problems! Thanks in advance! . In early 2018, Vacation Experts Inc. was interested in acquiring Beach Homes,

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I would really appreciated detailed help with these problems! Thanks in advance!

. In early 2018, Vacation Experts Inc. was interested in acquiring Beach Homes, Inc., a privately-held, real estate company. Beach Homes has 85 million shares currently outstanding. As a first step in deciding what price to bid for Beach Homes, Vacation Experts' finance department has prepared a two-year financial projection for the company assuming an acquisition. Use this projection and Beach Homes' 2017 actual financial figures to answer the questions below. Beach Homes Inc. 2-year Financial Projection (S millions) 2017 2018 2019 Income statement Net sales Cost of sales 320 395 410 120 130 145 200 265 265 50 55 58 15 17 22 25 24 28 110 169 157 335147 77 118 110 Gross income Depreciation Interest expense Operating expense:s Net income before tax Provision for taxes Net income after tax Balance sheet Cash and securities Accounts receivable Inventory Other current assets 45 60 62 25 51 42 47 7450 17 135 200 171 511 612 692 102 157 215 613 769 907 112 112 112 860 1081 1190 18 15 Total current assets Gross property and equipment Accumulated depreciation Net property and equipment Goodwill Total assets Accounts payable Short-term debt Current portion long-term debt Accrued expenses 50 9389 62 12 20 18 20 75 79 Total current liabilities Long-term debt Deferred taxes Shareholders' equity 21 142 208 211 358 400 390 60 55 61 300 418 528 860 1081 1190 Total liabilities and equity 7a. Estimate the present value of Beach Homes Inc.'s free cash flow for the years 2018 - 2019. Vacation Expert's WACC is 8 percent. Beach Homes' WACC is 10.5 percent, and the average of the two companies' WACCs, weighted by sales, is 9 percent. EBIT Tax rate EBIT(1-tax rate) Depreciation Capital expenditures Working capital Change in working capital Free cash flow 7b. Estimate the share price Vacation Experts Inc. should pay for Beach Homes at the end of 2017 assuming in the years after 2019 the company's free cash flow grows 5 percent per year in perpetuity

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