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9. Company 349's forecasted after tax cash flows before maintenance capital: (8 Marks) Year 1 2,500 Year 2 2,200 Year 3 2,800 Year 4 2,400 Year 5 3,100 Company 349's earnings per share in the most recent year were $1.20 per share. The company has 1,000 pref shares and 500 common shares. Pref shares pay dividends of $.25 per year. Maintenance capital is estimated at 3% of the above after-tax cash flows. The value of all future cash flows beyond year 5 is equal to 3 times the present value of the year 5 after tax free cash flow. A: What is the estimated price per common share assuming a 20% discount rate? (5 Marks) B: If total net income for the most recent month is $150, what is the price / earnings ratio based on your estimated price for common shares calculated in a)? (Note: if you were not able to calculate a share price in a), assume a common share price of $50. C: Assume the P/E ratio for Company 349 is 7.26. If the average P/E of comparable companies in the market place is 10, does the market outlook indicate Company 349 will perform better or worse than the market in general? (1 Mark) D: Based on a common share price of $38 per share, what is the estimated market capitalization (market value) of the firm? (1 Mark) 9. Company 349's forecasted after tax cash flows before maintenance capital: (8 Marks) Year 1 2,500 Year 2 2,200 Year 3 2,800 Year 4 2,400 Year 5 3,100 Company 349's earnings per share in the most recent year were $1.20 per share. The company has 1,000 pref shares and 500 common shares. Pref shares pay dividends of $.25 per year. Maintenance capital is estimated at 3% of the above after-tax cash flows. The value of all future cash flows beyond year 5 is equal to 3 times the present value of the year 5 after tax free cash flow. A: What is the estimated price per common share assuming a 20% discount rate? (5 Marks) B: If total net income for the most recent month is $150, what is the price / earnings ratio based on your estimated price for common shares calculated in a)? (Note: if you were not able to calculate a share price in a), assume a common share price of $50. C: Assume the P/E ratio for Company 349 is 7.26. If the average P/E of comparable companies in the market place is 10, does the market outlook indicate Company 349 will perform better or worse than the market in general? (1 Mark) D: Based on a common share price of $38 per share, what is the estimated market capitalization (market value) of the firm? (1 Mark)