Sora Industries has $69$ million outstanding$$ shares, $ $130$ million in$$ debt, $ $53$ million in$$ cash, and the following projected free cash flow for the next four$$ years: LOADING...$$:

a$.$ Suppose$$ Sora's revenue and free cash flow are expected to grow at a $4\mathrm{.}2\%$ rate beyond year $4.$ If$$ Sora's weighted average cost of capital is $11\mathrm{.}0\%,$ what is the value of$$ Sora's stock based on this$$ 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$.$Let$\text{'}$s return to the assumptions of part $($a$)$ and suppose Sora can maintain its cost of goods sold at$67\%$ of sales.$$ However, now suppose Sora reduces its$$ selling, general, and administrative expenses from$20\%$ of sales to$16\%$ of sales. What stock price would you estimate$$ now? $($Assume no other$$ expenses, except$$ taxes, are$$ affected.$)$

d$.$Sora$\text{'}$s net working capital needs were estimated to be$18\%$ of sales$($which is their current level in year$0).$ If Sora can reduce this requirement to$12\%$ of sales starting in year$1,$ but all other assumptions remain as in part $($a$),$ what stock price do you estimate for$$ Sora? $($Hint$$: This change will have the largest impact on$$ Sora's free cash flow in year$1.)$Sora Industries has $69$ million outstanding shares, $$130$ million in debt, $$53$ million in cash, and the following projected free cash flow for the next four years: $$:

a$.$ Suppose Sora's revenue and free cash flow are expected to grow at a $4\mathrm{.}2\%$ rate beyond year $4.$ If Sora's weighted average cost of capital is $11\mathrm{.}0\%,$ what is the value of Sora's 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$.$ Let's return to the assumptions of part $($a$)$ and suppose Sora can maintain its cost of goods sold at $67\%$ of sales. However, now suppose Sora reduces its selling, general, and administrative

expenses from $20\%$ of sales to $16\%$ of sales. What stock price would you estimate now? $($Assume no other expenses, except taxes, are affected.$)$

d$.$ Sora's net working capital needs were estimated to be $18\%$ of sales $($which is their current level in year $0).$ If Sora can reduce this requirement to $12\%$ of sales starting in year $1,$ but all other

assumptions remain as in part $($a$),$ what stock price do you estimate for Sora? $($Hint: This change will have the largest impact on Sora's free cash flow in year $1.)$Data table