In early 2018, Integrated Communications, Ltd. was interested in acquiring Fractal Antenna Systems, Inc., a privately held company producing compact antennae. As a first step in deciding what price to bid for Fractal, Integrated's finance department has prepared a five-year financial projection for the company assuming an acquisition. Use this projection and Fractal's 2017 actual financial figures to answer the questions below. Estimate Fractal's free cash flow from 2018 through 2022. 2 a 3 4 Estimate the present value of Fractal's free cash flow for the years 2018 to 2022 Fractal's WACC is 11.5 percent. 5. c. Estimate Fractal's firm value at the end of 2017, assuming the following D60 ii. Perpetual growth in free cash flow at 4% per year after 2022 d. Assurning Fractal has 60 million shares outstanding, what is the maximum price per share Integrated should pay to acquire Fractal's equity? 9 10 e. INCOME STATEMENT (S millions) Actual Forecast 2017 2018 2019 2020 $1,996 $2,267 $2,508 $2,827 644 742 830 959 1,352 1,525 1,678 1,868 492 785 1,061 1.301 171 178 191 175 212 239 270 306 477 323 156 86 186 126 61 34 $291 $197 $52 2021 $3,138 1,087 2,051 1,009 142 334 566 221 $345 2022 $3,571 1,241 2,330 917 110 374 929 363 $566 595 5 7 Net sales 8 Cost of sales 9 Gross income 20 Depreciation 21 Interest expense 22 Operating expenses 23 Net income before tax 24 Provision for taxes 25 Net income after tax 26 27 28 Cash and securities 29 Accounts receivable 30 Inventory 31 Other current assets 32 Total current assets 33 Gross property and equipment 34 Accumulated depreciation 35 Net property and equipment 36 Goodwill 37 Total assets 38 Accounts payable 39 Short-term debt BALANCE SHEET (5 millions) 5358 $413 $462 208 236 267 399 463 541 156 122 142 1,121 1,234 1,412 4.180 5,149 6,410 868 1,654 2,714 3,312 3,495 3,696 1,069 1,069 1,069 5,502 5.198 6.177 104 91 $42 $545 309 629 167 1,650 7,449 4,015 3,434 1.069 6,153 110 $14 $618 354 739 212 1.923 8,200 5,024 3,176 1,069 6,168 $704 405 864 206 2,179 9,016 5.941 3,075 1,069 6,323 135 393 432 58 22 239 323 23 Operating expenses Net income before tax Provision for taxes Net income after tax 212 477 186 $291 270 156 61 $95 306 86 34 $52 334 566 221 $345 374 929 363 $566 126 24 $197 25 26 27 28 29 30 399 142 31 32 33 34 35 36 37 38 39 40 Cash and securities Accounts receivable Inventory Other current assets 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 Total current liabilities Long-tem debt Deferred taxes Shareholders' equity Total liabilities and equity BALANCE SHEET (5 millions) $358 $413 $462 208 236 267 463 541 156 122 1.121 1,234 1,412 4,180 5,149 6,410 868 1,654 2,714 3,312 3,495 3,696 1,069 1,069 1.069 5,502 5,798 6,177 104 77 91 335 482 842 41 140 86 97 120 566 796 1,218 1,694 1,554 1,389 335 344 370 2,907 3.104 3,200 $5.502 $5.798 $6,177 $545 309 629 167 1,650 7,449 4,015 3,434 1,069 6,153 110 814 200 134 1,258 1,189 454 3.252 56,153 $618 354 739 212 1,923 8,200 5,024 3,176 1,069 6,168 117 583 223 174 1,099 966 303 3,598 $6.168 $704 405 864 206 2,179 9,016 5,941 3,075 1,069 6,323 135 393 267 168 963 699 496 4,163 56,323 165 41 42 43 44 45 46 PLEASE SHOW THE BREAK DOWN IN EXCEL SO I CAN FULLY UNDERSTAND HOW TO DO THIS. THANK YOU