Sora Industries has 65 million outstandingshares, $129 million indebt, $49 million incash, and the following projected free cash flow for the next fouryears: LOADING...

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a. SupposeSora's revenue and free cash flow are expected to grow at a 5.5% rate beyond year four. IfSora's weighted average cost of capital is 12.0%, what is the value of Sora stock based on thisinformation?

b.Sora's cost of goods sold was assumed to be67% of sales. If its cost of goods sold is actually70% ofsales, how would the estimate of thestock's valuechange?

c. Return to the assumptions of part (a) and suppose Sora can maintain its cost of goods sold at67% of sales.However, the firm reduces itsselling, general, and administrative expenses from20% of sales to16% of sales. What stock price would you estimatenow? (Assume no otherexpenses, excepttaxes, areaffected.)

d.Sora's net working capital needs were estimated to be18% of sales(their current level in yearzero). If Sora can reduce this requirement to12% of sales starting in year1, but all other assumptions are as in (a), what stock price do you estimate forSora? (Hint: This change will have the largest impact onSora's free cash flow in year1.)

a. SupposeSora's revenue and free cash flow are expected to grow at a 5.5% rate beyond year four. IfSora's weighted average cost of capital is 12.0%, what is the value of Sora stock based on thisinformation?

The stock price for this case is $

nothing

. (Round to the nearestcent.)

b.Sora's cost of goods sold was assumed to be67% of sales. If its cost of goods sold is actually70% ofsales, how would the estimate of thestock's valuechange?

The stock price for thiscase, when COGSincreases, is $

nothing

. (Round to the nearestcent.)

c. Return to the assumptions of part (a) and suppose Sora can maintain its cost of goods sold at67% of sales.However, the firm reduces itsselling, general, and administrative expenses from20% of sales to16% of sales. What stock price would you estimatenow? (Assume no otherexpenses, excepttaxes, areaffected.)

The stock price for thiscase, whenselling, general, and administrative costsdecrease, is $

nothing

. (Round to the nearestcent.)

d.Sora's net working capital needs were estimated to be18% of sales(their current level in yearzero). If Sora can reduce this requirement to12% of sales starting in year1, but all other assumptions are as in (a), what stock price do you estimate forSora? (Hint: This change will have the largest impact onSora's free cash flow in year1.)

The stock price for thiscase, when working capital needs arereduced, is $

nothing

. (Round to the nearestcent.)