J. Clark Inc. (JCI), a manufacturer and distributer of sports equipment, has grown until it has become a stable, mature company. Now JCI is planning its first distribution to shareholders. Shown below are the most recent year's financial statements and projections for the next year, 2020 (JCI has a fiscal year ending on June 30). JCI plans to liquidate $500 million of its short-term securities and distribute them on July 1, 2020, the first day of the next fiscal year, but has not yet decided whether to distribute with dividends or with stock repurchases.
									Inputs
									Amount of distribution		$500
									Tax rate		25%
WACC		11.0%
Number of shares		1,000
FCF constant growth rate		6.0%
		Actual	Projected
Income Statement (Millions of Dollars)		06/30/2019	06/30/2020
Net Sales		$19,490	$20,658
Costs (except depreciation)		$16,000	$16,960
Depreciation		$1,300	$1,378
Earning before int. & tax		$2,190	$2,320
Interest expense		$150	$152
Earnings before taxes		$2,040	$2,168
Taxes		$510	$542
Net income		$1,530	$1,626

U U UUUUUUULISI TOWe tax rate is 20% Projected 6/30/2019 6/30/2020 Calculation of Free Cash 9 Flow Operating current assets Operating current liabilities 12 Net operating working capital Net plant & equipment 4 Total net operating capital 75 Net operating profit after taxes 5 Inv. in operating capital - Free cash flow (FCF) $15,160.00 Caculate JCI's horizon value for 6/30/2020. FCF is expected to grow at a constant rate of 6% and JC's WACC is 11% Calculate JCI's value of operations for 6/30/2019 and 6/30/2020.lint: JCI's value of 31 operations on 6/30/2020 is equal to the horizon value.) 6/30/2019 6/30/2020 3 Valuation Horizon value 3 Value of operations 31 d. What is JCI's current intrinsie stock price (the price on 6/30/2019)? What is the projected intrinsie stock 53 price for 6/30/20207 See below for 39 calculations What is the projected intrinsie stock price on 7/1/2020 if Jl distributes the cash as dividende See below tor calculations what the related intrinsestock arcon 20.20 J u te the cash throue U U UUUUUUULISI TOWe tax rate is 20% Projected 6/30/2019 6/30/2020 Calculation of Free Cash 9 Flow Operating current assets Operating current liabilities 12 Net operating working capital Net plant & equipment 4 Total net operating capital 75 Net operating profit after taxes 5 Inv. in operating capital - Free cash flow (FCF) $15,160.00 Caculate JCI's horizon value for 6/30/2020. FCF is expected to grow at a constant rate of 6% and JC's WACC is 11% Calculate JCI's value of operations for 6/30/2019 and 6/30/2020.lint: JCI's value of 31 operations on 6/30/2020 is equal to the horizon value.) 6/30/2019 6/30/2020 3 Valuation Horizon value 3 Value of operations 31 d. What is JCI's current intrinsie stock price (the price on 6/30/2019)? What is the projected intrinsie stock 53 price for 6/30/20207 See below for 39 calculations What is the projected intrinsie stock price on 7/1/2020 if Jl distributes the cash as dividende See below tor calculations what the related intrinsestock arcon 20.20 J u te the cash throue