In 2022, Eagle Products EBIT is $300K, its tax rate is 21%, depreciation is $20K, capital expenditures are $60K, and the planned increase in net working capital is $30K.

The expected growth rate of the company for the coming 5 years is 10%. The ROE is 10% and the plowback ratio is 50%.

The company has a beta of 0.72. The market risk premium is 6%, 10-year Treasury Bond rate is 5% while 3-month Treasury Bill is 3%.

The long-term debt of the company consists of only one bond which has a coupon rate of 4% and current yield of 6%.

The amount of long-term debt is $5,000K Dollars while the market capitalization of the company is $25,000K Dollars.

The company has $500K as cash and cash equivalents. The shares outstanding of the company is 10K. The total debt amount of the company is 100K.

i. What is the Free Cash Flow to Firm (FCFF) in 2022?

ii. What is the sustainable growth rate of the company?

iii. What are the expected cash flows for 2023, 2024, 2025, 2026, 2027, and 2028

iv. What does the BETA of the company show? (One sentence is enough) From where can we find the BETA of the company?

v. Which one should be taken as risk free rate for the stock valuation: Treasury Bond Yield or Treasury Bill yield? Where can we find those rates?

vi. What is the cost of equity of the company?

vii. Which one should be used as cost of debt? Coupon rate or bond yield? Where can we get the bond yield information?

viii. What is the cost of debt after tax?

ix. What are the weights of debt and equity of the company?

x. What is the Weighted Average Cost of Capital (WACC)?

xi. Calculate the present value of the expected free cash flows to firm (FCFF) (Hint: In part iii. The expected cash flows are already calculated)

xii. What is the intrinsic value of the total equity? What is the intrinsic value of the stock?

xiii. What is the current stock price of the company. (Hint: Market Capitalization=Stock Price*Shares Outstanding)

xiv. Will you recommend to buy or sell the stock?