Its average collection period is 90 days Account receivable is same volume of inventory, but it is carried at sales price Inventory is 1/4 of annual sales and it is carried a cost price, which is 75% of sales Assuming expand production volume withtout any significant increase in per unit cost. Current Balance sheet Cash 1,600,000 A/P 900,000 A/R 2,400,000 Short-term debt 800,000 Inventoy 1,800,000 long-term debt 900,000 Net PP&E 4,800,000 Commom stock 1,800,000 Retained earnings 6,200,000 Total Assets 10,600,000 Total liability and equities 10,600,000 Currently: Depreciation 600,000 per year Tax 21% Base sales volume 1,000,000 Cost per unit 9.6 Sale price 7.2 Operating expense 1,000,000 Assume: annual inflation of 2.5% per year for the next 5 year sales will growth at 25% in year 1, 20% in year 2, 15% in year 3, 10% in year 4, 5% in year 5. the business can growth forever at 1.5% after year 5. WACC is 12%Question 1: What should be the valuation (NPV) for the business' FCF? Question 2: As the USD weaken from the Fed's EQ, foreign competitions increase pricing to accomendate their additional cost for the same level of their home currencies. Therefore, what if we increase our sales price by 20% to match the competitons without increase the cost? Question 3: As the USD weaken from the Fed's EQ, foreign competitions have to increase pricing to accomendate their additional cost. Therefore, what if the base sales volume double at 2,000,000 unit due to pricing advantage. Please build your FCF valuation below Year 1 Year 2 Year 3 Year 4 Year 5 Sales growth rate 25% 20% 15% 10% 5% Unit sales 1,000,000