Question 13 5 pts Rachel Lee is researching the MWC Corporation, a US based automobile parts manufacturing firm. MWC has recently entered into a long-term agreement with a German automobile company to be the sole supplier of an innovative suspension system that will be used with a newly designed, moderately priced sports car. Lee believes that this new agreement will favorably impact MWC's stock price. To support her belief, Lee reviewed MWC's financial statements and sales forecasts and reached the following conclusions: MWC's earnings and FCFE's growth will be 15 percent per year for two years, then stabilised at 8 percent per year. MWC will maintain its current dividend payout ratio. MWC has a beta of 1.2. Government bond yield 6.4 percent, and the market equity risk premium is 5.5 percent. The most recent dividend paid to MWC share holders was $2.30. Lee also has MWC's current cash flow statement, which follows: MWC Incorporated Statement of Cash Flows, Dec 31, 2000 (5 thousands) Cash How from Operating Activities Net income Depredation Changes in Working Capital (Increase) Decrease in receivables (Increase) Decrease in inventories Increase (Decrease) in payables Increase (Decrease) in other current liabilities Not change in working capital Net cash from operating activities Cash from investing Activities Purchase of fixed assets (PP&E) Net cash from investing activities 29,960 8,400 (4,000) (6,400) 4,800 1,200 (4,400) 33,960 (12,000) (12,000) Cash from Hinancing Activities Change in debt outstanding Payment of cash dividends 3,2001 (23,920) Net cash from financing activities (20,720 Net change in cash and cash equivalents 1.240 Beginning of period cash 8,760 End of period cash 10,000 The value of MWC's common stock using the two-stage FCFE approach is closest to: $55,10 $59.09 $68.24 $69.88 $72.41