Sora Industries has 6868 million outstanding shares, $120 million in debt, $49 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 4.4% 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.)

9 million in cash, and the following projected free cash flow for the next four years at Sotalaiclochased on this e expe rassu n Data Table ain hi flo Click on the icon located on the topiright coner of the data table below in order to opy is contentson this into a spreadsheet) on this Year 0 2 3 Earnings & FCF Forecast (S million) Sales 2 Growth vs. Prior Year 433.0 468.0516.0 547.0574.3 -8.1 % 10.3% 6.0% 5.0% (313.6) (345.7) (366.5) (384.8 154.4 170.3180.5 189.5 (93.6) (103.2) (1094) (114.9) (7.0)7.5)(9.0) (9.5) 65.2 (21.5) (23.8) (24.8)(26.1) 9.5 (7.7) (10.0)(9.9)(10.4) (6.3) (8.6) (5.6)(4.9) 33.3 113 Cost of Goods Sold 4 Gross Profit 5 Selling, General & Admin. 6 Depreciation 7EBIT 53.859.6 62.1 Less: Income tax at 40% 9 Plus: Depreciation 10 Less: Capital Expenditures 7.0 7.5 9.0 Less: Increases in NWC 12 Free Cash Flow 25.3 24.6 30.8 Print Done wer