Sora Industries has 60 million outstanding shares, $122 million in debt, $55 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 4.8% rate beyond year 4. If Sora's weighted average cost of capital is 9.0%, 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.)

\begin{tabular}{|c|c|c|c|c|c|c|c|} \hline & & Year & 0 & 1 & 2 & 3 & 4 \\ \hline \multicolumn{8}{|c|}{ Earnings \& FCF Forecast (\$ millions) } \\ \hline 1 & Sales & & 433.0 & 468.0 & 516.0 & 547.0 & 574.3 \\ \hline 2 & \multicolumn{2}{|c|}{ Growth versus Prior Year } & & 8.1% & 10.3% & 6.0% & 5.0% \\ \hline 3 & \multicolumn{3}{|l|}{ Cost of Goods Sold } & (313.6) & (345.7) & (366.5) & (384.8) \\ \hline 4 & \multicolumn{3}{|l|}{ Gross Profit } & 154.4 & 170.3 & 180.5 & 189.5 \\ \hline 5 & \multicolumn{3}{|c|}{ Selling, General, and Administrative } & (93.6) & (103.2) & (109.4) & (114.9) \\ \hline 6 & \multicolumn{3}{|l|}{ Depreciation } & (7.0) & (7.5) & (9.0) & (9.5) \\ \hline 7 & \multicolumn{3}{|l|}{ EBIT } & 53.8 & 59.6 & 62.1 & 65.2 \\ \hline 8 & \multicolumn{3}{|c|}{ Less: Income tax at 40%} & (21.5) & (23.8) & (24.8) & (26.1) \\ \hline 9 & \multicolumn{3}{|l|}{ Plus: Depreciation } & 7.0 & 7.5 & 9.0 & 9.5 \\ \hline 10 & \multicolumn{3}{|c|}{ Less: Capital Expenditures } & (7.7) & (10.0) & (9.9) & (10.4) \\ \hline 11 & \multicolumn{3}{|l|}{ Less: Increases in NWC } & (6.3) & (8.6) & (5.6) & (4.9) \\ \hline 12 & \multicolumn{3}{|l|}{ Free Cash Flow } & 25.3 & 24.6 & 30.8 & 33.3 \\ \hline \end{tabular}