Scenario 2 Assumptions: Tax rate is 40%. Expenses before interest and taxes (EBIT), capital expenditures, and depreciation will grow at 20% for the next three years. After three years, the growth in EBIT will be 2%, and capital expenditure and depreciation will offset each other. Weighted average cost of capital (WACC) = 12%. Target debt ratio = 10%. Scenario 2 FCFF (in $ millions) Year 0 Year 1 Year 2 Year 3 Year 4 EBIT $45.00 $54.00 $64.80 $77.76 $79.70 Capital Expenditures 18.00 21.600 25.92 31.10 Depreciation 12.00 14.40 17.28 20.74 Change in Working Capital 6.00 6.30 6.60 7.20 7.20 FCFF 18.90 23.64 29.09 40.62