Question 3 - Greenbriar Value Greenbriar Railcar Manufacturing of Lake Oswego has projected sales of $275 million next year. Costs (including depreciation) are expected to be 72 percent of sales and depreciation and net investment are expected to be 3 percent and 8 percent of sales, respectively. Sales is expected to grow at 22 percent the following year, with the growth rate declining by 4 percentage points per year until the growth rate reaches 6 percent, where it is expected to drop to 4 percent the next year and remain there indefinitely. Greenbriar has debt of $115 million outstanding. There are 3.5 million shares of stock outstanding and investors require a return of 14 percent on the company's stock. The corporate tax rate is 21 percent. Your Name: Question 3 - Greenbriar Value What is your estimate of the current stock price? What do you know? Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Growth rates, by year What else? Cash Flow Estimates: Year tear 1 Year 2 Year Year 4 Year 5 tear 6 Year 6 Firm Value at To? Equity Value at To? Part 2: Suppose instead that you estimate the terminal value of the company using a CF multiple. The industry CF multiple is 8 current year earnings. What is your new estimate of the company's stock price? Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Cash flow $- $- $- $- $- $- Firm Value at To? $0 Equity Value at To