In this simple question, I will walk you step by step through a FCFE valuation. Ingles Inc., is a slow growing cash cow. Last year, the company saw an ROE of 22.0% (avg., 21.2% over last five years), and reinvested 45% of its Net Income back into the business (avg., 53.5% over last five years) leaving 55% as FCFE (avg., 46.5% over last five years). Last year, FCFE was $679M on Net Income of $1,235M. The closing Shareholders Equity was $5,620M.

The company needs to restructure its operations over the next three years. In the following 3 years, ROE is expected to fall to 18.0% due to restructuring costs. Furthermore, the company will reinvest 65% of Net Income each year over this three-year period this represents additional investment needed to upgrade operations.

After the three-year period, the company expects to enter into a long-run trend where ROE will average 24.0%. In addition, over the long-term, the company expects to reinvest at a much lower rate of 20%.

The appropriate discount rate is 10.0%.

What growth rate will the company experience each year over the three-year period __________________ ________________________________?

What is the closing Shareholders Equity at end of next three years ___________________________ and __________________________ and _________________________?

What is the Net Income for next three years _____________________ and __________________________ and _________________________?

What is the FCFE for next three years _____________________ and __________________________ and _________________________?

What growth rate will the company experience each year over the long-term __________________ ________________________________?

Estimate a Terminal Value using a Gordons Model ______________________________________________?

What is the present value of FCFE in years one through three _____________________________________ __________________________________?

What is the present value of the Terminal Value calculated above __________________________ _____________________________________________?

What is the Market Cap of the company _____________________________________________________?