Question 1 As a credit officer of ABC Bank, you are interested in estimating future expected cash flows of a retail company. For this purpose, you have forecasted the financial statements of the company. Following are the excerpts related to the historical statement for 2017 and forecast financial statements for the next five years: Particulars UOM 2017A 2018F 2019F 2020F 2021F 2022F EBITDA "000 8,996 6,282 4,795 2,870 2,263 3,694 3,774 4,470 6,357 4,354 3,299 3,060 Net Interest Expenses "000 Depreciation "000 2.235 2,237 2,248 2,269 2,067 2,459 2.259 -2.688 Profit/Loss After Tax "000 -2,311 -1,796 -2,328 -3,067 Balance Sheet Gross Fixed Assets "000 61,440 62,140 63,040 61,840 19,302 62,440 23,787 62,740 26,046 "000 17,067 21,539 28,315 Accumulated Depreciation Other Non-Current Assets "000 18,840 18,840 18,840 18,840 18,840 18,840 Accounts Receivable "000 57,466 47,918 32,854 27,983 24,207 22,764 Inventory "000 34,962 31,210 24,777 21,104 19,473 18,313 Cash "000 12,290 7,000 3,500 3,500 3,500 3,500 Other Current Assets "000 2,483 1,230 1,230 1,230 1,230 1,230 Account Payables "000 14,542 9,856 14,575 13,190 12,590 13,388 2,147 "000 Other Current Liabilities 3,346 2,147 2,147 2,147 2.147 Company is planning to use the target capital structure in the ratio of debt to total assets of 60%. It has estimated that the average target cost of debt on both long and short term debt would turn out to be 8%. Company is in the 40% tax rate bracket. Company has a beta of 1.6. It will use the surrogate of T-Bill rate as Risk Free rate, which is estimated at 5.5% and the required return on stock market index is 9%. Further, it is forecasted that the growth in the company will be lower than the GDP growth rate of 4% and the company growth rate is estimated to be 3%.(Marks 10) Required: 1) Calculate Free Cash Flows (FCFF) for the firm from 2018 to 2022. 2) Calculate the WACC and the terminal value of the firm. 3) Calculate the Enterprise Value of the firm for the year 2017