Sora Industries has 70 million outstandingshares, $ 126 million indebt, $ 57 million incash, and the following projected free cash flow for the next four years.

:

a. SupposeSora's revenue and free cash flow are expected to grow at a 5.9 % rate beyond year 4. IfSora's weighted average cost of capital is 9.0 %, what is the value ofSora's 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. Let's return to the assumptions of part (a) and suppose Sora can maintain its cost of goods sold at67% of sales.However, now suppose Sora 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(which is their current level in year0). If Sora can reduce this requirement to12% of sales starting in year1, but all other assumptions remain as in part (a), what stock price do you estimate forSora? (Hint: This change will have the largest impact onSora's free cash flow in year1.)