Part $2$

What is the expected free cash flow to equity in $2027($in $ million$)?$

Part $3$

What is the horizon value $($terminal value$)$ in $2027($in $ million$)?$

Part $4$

What is the market value of equity today $($in $ million$)?$

Part $5$

What is the fair stock price today?Intro

In the most recent year $(2023),$ ZSeparator had an EBIT of $$440$ million. Depreciation was $$88$ million, interest

expenses were $$23$ million, increase in net working capital was $$44$ million and capital expenditure was $$110$

million.

Over the next $4$ years, EBIT is expected to grow by $20\%$ per year, depreciation by $15\%$ per year, capital

expenditure by $25\%$ per year and change in net working capital by $15\%$ per year. Debt and interest expenses are

expected to stay constant. The annual free cash flow to equity is expected to grow by $2\%$ per year after $2027.$

The cost of equity is $15\%$ and the average tax rate is $34\%.$ The firm has $10$ million shares outstanding.

Part $1$

What was the free cash flow to equity in $2023($in $ million$)?$

Correct $$