Sora Industries has 68 million outstanding shares, $ 127 million in debt, $ 40 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 4.5 % rate beyond year 4. If Sora's weighted average cost of capital is 11.0 %, 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.)

Year 0 2 4 Earning & FCF Forecast (Smillions) 1 Sales 2 Growth vs. Prior Year 3 Cost of Goods Sold 4Gross Profit 5 Selling, General & Admin. 6 Depreciation 7 EBIT 8 Less: Income tax at 40% 9 Plus: Depreciation 43300.00% 46800.00% 51600.00% 547 574.3 10.30% 6.00% 5.00% -31360.00% -34570.00%-366.5-384.8 $ 154.40$ 170.30 180.5 189.5 $ (93.60) $ (103.20) -109.4 -114.9 8.10% $(7.00) $(7.50) 596096 62.1 65.2 $ (21.50 $ (23.80 -24.8 -26.1 9 9.5 -770.00000%-1000.0000096-9.9-10.4 8.6-5.6 -4.9 24.6 30.8 33.3 538096 $7.00 7.5 10 Less: Capital Expenditures 11 Less: Increases in NWC 12 Free Cash Flow $ (6.300 25.3