Question 3 You have been given the free cash flows for the next three years for Postum Inc., a firm that is expected to have three years of high growth: Base year Expected growth EBIT (1-t) Reinvestment FCFF $100.00 $40.00 $60.00 1 6.00% $106.00 $42.40 $63.60 6.00% $112.36 $44.94 $67.42 3 6.00% $119.10 $47.64 $71.46 Assuming that the company's return on capital investment (ROIC) will stay unchanged forever and that the cost of capital is 8%. A. What are the reinvestment rate of the firm from year 1 to year 3 B. Based on the given information, what are the return on capital investment rate (ROIC) from year 1 to year 3? C. If the growth rate beyond year 3 is 3% in perpetuity what will be the reinvestment rate beyond year 3? D. Estimate the terminal value for the firm, i.e., the value at the end of year 3). For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). Question 3 You have been given the free cash flows for the next three years for Postum Inc., a firm that is expected to have three years of high growth: Base year Expected growth EBIT (1-t) Reinvestment FCFF $100.00 $40.00 $60.00 1 6.00% $106.00 $42.40 $63.60 6.00% $112.36 $44.94 $67.42 3 6.00% $119.10 $47.64 $71.46 Assuming that the company's return on capital investment (ROIC) will stay unchanged forever and that the cost of capital is 8%. A. What are the reinvestment rate of the firm from year 1 to year 3 B. Based on the given information, what are the return on capital investment rate (ROIC) from year 1 to year 3? C. If the growth rate beyond year 3 is 3% in perpetuity what will be the reinvestment rate beyond year 3? D. Estimate the terminal value for the firm, i.e., the value at the end of year 3). For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac)