P9-21 (similar to) Question Help Sot ledustries has 0 million outstanding shares, 5128 million in debt. 544 million in cash, and the following projected from cash flow for the next four years a. Suppose Bor's revenue and free cash fow are expected to grow at a 32% rate beyond year 4. Sora's weighted average cost of capital is 13.0%, what is the value of Sora's stock based on this information 11. Son's cost of goods sold was assumed to be 67% of sales of its cost of goods sold is actually 70% of sales, how would the estimate of the stock's value change? e. Le return to the sumptions of part (a) and suppose or can maintains cost of goods sold at 67% of sales. However, now suppose Sora reduces tis selling gener, and administrative expenses from 20% of sales to 10% of sales. What stock price would you stimato now? (Assume no other expenses, except taxes, are affected) d. Sora's networking capital needs were estimated to be 18% of sales (which is their current level in year D). If Sora can reduce this requirement to 12% of a starting in year 1, but all other assumptions remain as in parta), what stock price do you estimate for Sora? (Hint: This change will have the largest impact on Sora's free cash flow in year 1.) 3. Suppose Son's revenue and free cash flow are expected to grow at 32% rate beyond your & Sons weighted average cost of capital is 13.0%, what is the value of Bora's stock based on this Information The Mock price for this catei Round to two decimal places) X i Data Table (Click on the following icon in order to copy its contents into a spreadsheet.) 0 1 2 3 4 433.0 Year Earnings & FCF Forecast ($ million) 1 Sales 2 Growth vs. Prior Year 3 Cost of Goods Sold 4 Gross Profit 5 Selling, General & Admin. 6 Depreciation 7 EBIT Less: Income tax at 40% 9 Plus: Depreciation 10 Less: Capital Expenditures 11 Less: Increases in NWC 12 Free Cash Flow 468.0 516.0 547.0 574.3 8.1% 10.3% 6.0% 5.0% (313.6) (345.7) (366.5) (384.8) 154.4 170.3 180.5 189.5 (93.6) (103.2) (109.4) (114.9) (7.0) (7.5) (9.0) (9.5) 53.8 59.6 62.1 65.2 (21.5) (23.8) (24.8) (26.1) 7.0 7.5 9.0 9.5 (7.7) (10.0) (9.9) (10.4) (6.3) (8.6) (5.6) (4.9) 25.3 24.6 30.8 33.3 di Print Done P9-21 (similar to) Question Help Sot ledustries has 0 million outstanding shares, 5128 million in debt. 544 million in cash, and the following projected from cash flow for the next four years a. Suppose Bor's revenue and free cash fow are expected to grow at a 32% rate beyond year 4. Sora's weighted average cost of capital is 13.0%, what is the value of Sora's stock based on this information 11. Son's cost of goods sold was assumed to be 67% of sales of its cost of goods sold is actually 70% of sales, how would the estimate of the stock's value change? e. Le return to the sumptions of part (a) and suppose or can maintains cost of goods sold at 67% of sales. However, now suppose Sora reduces tis selling gener, and administrative expenses from 20% of sales to 10% of sales. What stock price would you stimato now? (Assume no other expenses, except taxes, are affected) d. Sora's networking capital needs were estimated to be 18% of sales (which is their current level in year D). If Sora can reduce this requirement to 12% of a starting in year 1, but all other assumptions remain as in parta), what stock price do you estimate for Sora? (Hint: This change will have the largest impact on Sora's free cash flow in year 1.) 3. Suppose Son's revenue and free cash flow are expected to grow at 32% rate beyond your & Sons weighted average cost of capital is 13.0%, what is the value of Bora's stock based on this Information The Mock price for this catei Round to two decimal places) X i Data Table (Click on the following icon in order to copy its contents into a spreadsheet.) 0 1 2 3 4 433.0 Year Earnings & FCF Forecast ($ million) 1 Sales 2 Growth vs. Prior Year 3 Cost of Goods Sold 4 Gross Profit 5 Selling, General & Admin. 6 Depreciation 7 EBIT Less: Income tax at 40% 9 Plus: Depreciation 10 Less: Capital Expenditures 11 Less: Increases in NWC 12 Free Cash Flow 468.0 516.0 547.0 574.3 8.1% 10.3% 6.0% 5.0% (313.6) (345.7) (366.5) (384.8) 154.4 170.3 180.5 189.5 (93.6) (103.2) (109.4) (114.9) (7.0) (7.5) (9.0) (9.5) 53.8 59.6 62.1 65.2 (21.5) (23.8) (24.8) (26.1) 7.0 7.5 9.0 9.5 (7.7) (10.0) (9.9) (10.4) (6.3) (8.6) (5.6) (4.9) 25.3 24.6 30.8 33.3 di Print Done