Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

solve a-d for me please! thank you! Homework: Hom... HW Score: 37.36%, 34 of 91 points O Points: 0 of 4 Sav Year 0 2

solve a-d for me please! thank you!
image text in transcribed
image text in transcribed
Homework: Hom... HW Score: 37.36%, 34 of 91 points O Points: 0 of 4 Sav Year 0 2 3 Earnings and FCF Forecast (5 million) 1 Sales 433.0 468.0 516.0 5470 574.3 2 Growth vs. Prior Year 8.1% 10.3% 6.0% 5.0% 3 Cost of Goods Sold (313.6) (345.7) (366.5) (384.8) 4 Gross Profit 1544 170.3 180.5 189.5 5 Seling, General, & Admin (93,6) (1032) (109.4) (1149) 6 Depreciation (7.0) (7.5) (9.0) (9.5) 7 EBIT 53.8 59.6 62.1 65.2 8 Less: Income Tax at 40% (21.5) (23.8) (248) (26.1) 9 Plus: Depreciation 7.0 7.5 9.0 9.5 10 Less: Capital Expenditures (7.7) (10,0) (9.9) (104 11 Less: Increase in NWC (6.3) (8.6) (5.6) (4.9) 12 Free Cash Flow 25.3 24.6 30.8 33.3 a. Suppose Sota's revenue and free cash flow are expected to grow at a 5.8% rate beyond year four. If Sora's weighted average cost of capital de 13.0%, what is value of Sora stock based on this information? b. Sora's cost of goods sold was assumed to be 67% of sales. If its cost of goods sold is actually 70% of sales, how would the estimate of the stock's value change c. Return to the assumptions of part (a) and suppose Sora can maintain its cost of goods sold at 67% of sales. However, the firm reduces its selling general and administrative expenses from 20% of sales to 16% of sales. What stock price would you stimato now? (Assume no other expenses, except taxes, are affected) d. Sora's not working capital needs were estimated to be 18% of sales their current level in year zero). If Sora can reduce this requirement to 12% of sales startin year 1. but all other assumptions are as in (a) what stock price do you estimate for Sora? (Hint. This change will have the largest impact on Sou's tree cash flow in vear 1.3 a. Suppose Sora's revenue and free canh flow are expected to grow at a 5,8% rato beyond year four. Il Sona's weighted average cost of capital in 13.0%. What is the Part 1 of 4 Points: 0 of 4 Sora Industries has 63 million outstanding shares. $124 million in debt, $50 million in cash, and the following projected free cash flow for the next four years: Year 0 1 2 3 Earnings and FCF Forecast (5 million) Gal

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Forecasting Principles And Practice

Authors: Rob J Hyndman, George Athanasopoulos

1st Edition

0987507109, 978-0987507105

More Books

Students also viewed these Finance questions

Question

Why is it important to state the priority level for a use case?

Answered: 1 week ago

Question

Discuss how selfesteem is developed.

Answered: 1 week ago