Sora Industries has 70 milion outstanding shares, 5120 milion in debt $53 milion 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 4.1% rate beyond year four. If Sora's weighted average cost of capital is 13.0%, what is the value of Sora 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. Return to the assumptions of part(a) and suppose Sora can maintain its cost of goods sold at 67% of sales. However, the firm reduces its seling 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 not working capital needs were estimated to be 18% of sales (their current level in year zero). If Sora can reduce this requirement to 12% of sales starting in year 1, but all other assumptions are as in (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) a. Suppose Sora's revenue and free cash flow are expected to grow at a 4.1% rate beyond year four. If Sora's weighted average cost of capital is 13.0%, what is the value of Sora stock based on this information? The stock price for this case is 55.03. (Round to the nearest cent) 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? The stock price for this case, when COGS increases, is $(Round to the nearest cent.) c. Return to the assumptions of part (a) and suppose Sora can maintain its cost of goods sold at 67% of sales. However, the firm reduces is seling 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.) The stock price for this case, when seling general, and administrative costs decrease, is $] (Round to the nearest cent) d. Sora's networking capital needs were estimated to be 18% of sales (their current level in year zero). If Sora can reduce this requirement to 12% of sales starting in year 1, but all other assumptions are as in (a). what stock price do you estimate for Sora? (Hint. This change will have the largest impact on Sora's free cash flow in veer 1) The stock price for this case, when working capital needs are reduced, is $(Round to the nearest cent) of Data Table - X of Wha and to 3 4 prid st cell (Click on the following icon in order to copy its contents into a spreadsheet.) Year 0 1 2 Earnings and FCF Forecast (million) 1 Sales 433.0 468.0 516.0 2 Growth vs. Prior Year 8.1% 10.3% 3 Cost of Goods Sold (313.6) (345.7) 4 Gross Profit 154.4 170.3 5 Selling, General, & Admin. (93.6) (1032) 6 Depreciation (7.0) (7.5) 7 EBIT 53.8 59.6 8 Less: Income Tax at 25% (13.5) (14.9) 9 Plus: Depreciation 7.0 7.5 10 Less: Capital Expenditures (7.7) (100) 11 Less: Increase in NWC (6.3) (8.6) 12 Free Cash Flow 33.4 33.6 547.0 6.0% (366.5) 180.5 (109.4) (9.0) 62.1 (15.5) 9.0 (9.9) (5.6) 40.1 574.3 5.0% (384.8) 189.5 (114.9) (9.5) 65.2 (16.3) 9.5 (10.4) (4.9) 43.1 Print Done Sora Industries has 70 milion outstanding shares, 5120 milion in debt $53 milion 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 4.1% rate beyond year four. If Sora's weighted average cost of capital is 13.0%, what is the value of Sora 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. Return to the assumptions of part(a) and suppose Sora can maintain its cost of goods sold at 67% of sales. However, the firm reduces its seling 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 not working capital needs were estimated to be 18% of sales (their current level in year zero). If Sora can reduce this requirement to 12% of sales starting in year 1, but all other assumptions are as in (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) a. Suppose Sora's revenue and free cash flow are expected to grow at a 4.1% rate beyond year four. If Sora's weighted average cost of capital is 13.0%, what is the value of Sora stock based on this information? The stock price for this case is 55.03. (Round to the nearest cent) 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? The stock price for this case, when COGS increases, is $(Round to the nearest cent.) c. Return to the assumptions of part (a) and suppose Sora can maintain its cost of goods sold at 67% of sales. However, the firm reduces is seling 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.) The stock price for this case, when seling general, and administrative costs decrease, is $] (Round to the nearest cent) d. Sora's networking capital needs were estimated to be 18% of sales (their current level in year zero). If Sora can reduce this requirement to 12% of sales starting in year 1, but all other assumptions are as in (a). what stock price do you estimate for Sora? (Hint. This change will have the largest impact on Sora's free cash flow in veer 1) The stock price for this case, when working capital needs are reduced, is $(Round to the nearest cent) of Data Table - X of Wha and to 3 4 prid st cell (Click on the following icon in order to copy its contents into a spreadsheet.) Year 0 1 2 Earnings and FCF Forecast (million) 1 Sales 433.0 468.0 516.0 2 Growth vs. Prior Year 8.1% 10.3% 3 Cost of Goods Sold (313.6) (345.7) 4 Gross Profit 154.4 170.3 5 Selling, General, & Admin. (93.6) (1032) 6 Depreciation (7.0) (7.5) 7 EBIT 53.8 59.6 8 Less: Income Tax at 25% (13.5) (14.9) 9 Plus: Depreciation 7.0 7.5 10 Less: Capital Expenditures (7.7) (100) 11 Less: Increase in NWC (6.3) (8.6) 12 Free Cash Flow 33.4 33.6 547.0 6.0% (366.5) 180.5 (109.4) (9.0) 62.1 (15.5) 9.0 (9.9) (5.6) 40.1 574.3 5.0% (384.8) 189.5 (114.9) (9.5) 65.2 (16.3) 9.5 (10.4) (4.9) 43.1 Print Done