NEED ASSISTANCE WITH THE EXPLANATION FOR PART B$.$ THEN NEED ASSISTANCE WITH C$,$D$,$E

PLEASE SHOW EXCEL EQUATIONS

Traver$-$Dunlap Corporation's has a $15\%$ weighted average cost of capital $($WACC$).$ Its most recent sales were $$980$ million and its c$.$ Suppose the growth rates for Years $2,3,$ and thereafter can be increased to $7\%.$ What is the new value of operations? Did it go

up or down? Why did it change in this manner?

Sales growth rates after Year $1=,7\%$

Total value of operations at Year $0,V_{op,0}=,$ Hint: Create a scenario and copy the new scenario's output as a value.

d$.$ Return the growth rates to the original values. Now suppose that the capital requirement ratio can be decreased to $60\%$ for all

three years and thereafter. What is the new value of operations? Did it go up or down relative to the original base case? Why did

it change in this manner?

$[$ Capital requirement ratios $=,60\%],[$ Total value $of$ operations $at$ Year $0,V_{op\mathrm{.}0}=,H]$

Total value $of$ operations $at$ Year $0,V_{op,0}=,$ Hint: Create a scenario and copy the new scenario's output $as$ a value.

e$.$ Leave the capital requirement ratios at $60\%$ for all three years and thereafter, but increase the sales growth rates for Years $2,3,$

and thereafter to $7\%.$ What is the new value of operations? Did it go up or down relative to the other scenarios? Why did it

change in this manner?

Sales growth rates after Year $1=,7\%$

Capital requirement ratios $=,60\%$

Total value of operations at Year $0,V_{op\mathrm{.}0}=$

Hint: Create a scenario and copy the new scenario's output as a value.

total net operating capital is $$970$ million. The following shows estimates of the forecasted growth rates, operating profitability

ratios, and capital requirement ratios for the next three years. All of these ratios are expected to remain constant after the third

year. Use this information to answer the following questions.

Estimated Data for Traver$-$Dunlap Corporation

Annual sales growth rate

Operating profitability $($NOPAT$/$Sales$)$

Capital requirement $($OpCap$/$Sales$)$

Tax rate

a$.$ Use the data to forecast sales, net operating profit after taxes $($NOPAT$),$ total net operating capital $($OpCap$),$ free cash flow

$($FCF$),$ growth rate in FCF$,$ and return on invested capital $($ROIC$)$ for the next three years. What is the FCF growth rate for Year $3$

and how does it compare with the growth rate in sales? What is the ROIC for Year $3$ and how does it compare with the $15\%$

WACC?

The FCF growth rate at $6\%$ during year $3$ is the same rate in sales for year $3.$ The ROIC of

$12\mathrm{.}50\%$ for year $3$ is less than the WACC of $15\%.$

b$.$ What is the value of operations at Year $3,$ Vop, $3?$ What is the current value of operations, Vop, $0?$ How does the value of

operations at Year $0$ compare with the total net operating capital at Year $3,$ and what might explain this relationship?

Free cash flow $at$ beginning $of$ the constant growth phase $(FC{F}_3)=,$$$72\mathrm{.}300$

Weighted average cost $of$ capital $(WACC)=,15\mathrm{.}00\%$

Constant growth rate $(g_L)=,6\%$

$H{V}_3=V_{op,3}=,$$$851\mathrm{.}142$

Present value $ofHV=,$$$559\mathrm{.}640$

Present value $of$ free cash flows $=,$$$247\mathrm{.}219$

Total value $of$ operations $at$ Year $0,V_{op,0}=,$$$806\mathrm{.}859$