Perform a DCF valuation of Mary WashingtonPediatrics using the projections in Exhibit 3.Be sure to show the FreeCash Flow, Terminal Value and discounting calculations.Use the 9% rate in the case forWACC.Decide whether to use traditional discounting or the mid-year convention.

Do some sensitivity analysis on the revenue and operating margin assumptions.Which is the bigger value driver?

Please show all work when needed.

Thanks!

Exhibit 3 Mary Washington Pediatrics Atwood's Financial Forecast for Mary Washington Pediatrics (financial figures in thousands of US dollars) 2016 2017 2018 2019 2020 2021 2022 2023 Revenue growth 0.5% 3.0% 5.0% 5.0% 5.0% 3.0% 3.0% 2.0% Operating expenses/ revenue 57.4% 57.4% 57.0% 56.5% 56.0% 54.0% 53.0% 53.0% Net working capital 315.9 272.1 214.2 176.5 181.9 185.5 189.2 193.0 Net equipment 326.3 375.1 415.1 455.1 475.1 498.2 484.2 464.6 Depreciation 10.4 14.0 20.0 28.0 37.0 42.0 42.9 42.9 Capital expenditures 4.1 62.8 60.0 68.0 57.0 65.1 28.9 23.3 Net revenue 1,602 1,682 1,766 1,854 1,910 1,967 2,007 Operating expenses 920 959 998 1,038 1,031 1,043 1,064 Depreciation 14 20 28 37 42 43 43 Physician salary 500 525 551 579 596 614 626 Operating profit 168 178 189 200 240 268 274