Projections for 2.4 Fleet Meat Packing Co., 2008-2012 Projection Sales EBITDA margin Depreciation Increase in deferred taxes CAPEX + Net WC increase Actual 2007 2223.2 2.55% 29.0 0.5 38.7 2008 2245.6 2.57% 32.6 1.6 41.8 2009 2284.2 2.65% 342 22 42.2 Forecast 2010 2308.0 2.71% 32.9 2.9 33.4 2011 2550.0 2.71% 32.0 2.5 32.5 2012 2616.7 2.71% 31.5 2.5 32.5 Corporate tax rate: 38% GCL estimates that the buyer can finance the acquisition with 50% debt that can be raised at 7%. The beta of companies in Fleet's industry with similar capital structures is 1.32. The yield on 10-year Treasury notes is 4.5%, the equity risk premium is about 4.4% and the micro-cap size premium is about 3.9%. Problem 2.4 . GCL Industries is an industrial conglomerate undergoing restructuring. As part of its restructuring program GCL is considering the sale of its low-growth Fleet Meat Packing unit. Fleet is in the high volume-low margin meatpacking business. Fleets volume sales are not expected to increase in the future and the long-term growth of dollar sales is projected at 3% per year. Operating projections and other pertinent data are presented below. Estimate the price GCL may get for Fleet as of January 1, 2008