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Sora Industries has 65 million outstanding shares, $127 million in debt, $57 million in cash, and the following projected free cash flow for the
Sora Industries has 65 million outstanding shares, $127 million in debt, $57 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 3.3% rate beyond year 4. If Sora's weighted average cost of capital is 12.0%, 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
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