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Please show the process! FCF Forecast ($ million) Year 0 1 2 3 4 Sales 240 270 290 310 325.5 Growth versus Prior Yea r
Please show the process!
FCF Forecast ($ million) | |||||
Year | 0 | 1 | 2 | 3 | 4 |
Sales | 240 | 270 | 290 | 310 | 325.5 |
Growth versus Prior Year | 12.50% | 7.40% | 6.90% | 5.00% | |
EBIT (10% of Sales) | 27 | 29 | 31 | 32.55 | |
Less: Income Tax (37%) | -9.99 | 10.73 | 11.47 | 12.44 | |
Less Increase in NWC (12% of Change in Sales) | 3.6 | 2.4 | 2.4 | 1.86 | |
Free Cash Flow | 13.41 | 15.87 | 17.13 | 18.65 | |
Banco Industries expect sales to grow at a rapid rate over the next three years, but settle to an industry growth rate of 5% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. If Banco industries has a weighted average cost of capital of 11%, $50 million in cash, $80 million in debt, and 18 million shares outstanding, which of the following is the best estimate of Banco's stock price at the start of year 1? |
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