The financial statements of Lioi Steel Fabricators are shown below$--$ both the actual results for $2010$ and the projections for $2011.$ Free cash flow is expected to grow at a $6\%$ rate after $2011.$ The weighted average cost of capital is $11\%.$

a If operating capital as of $12/31/2010$ is $$502\mathrm{.}2$ million, what is the free cash flow for $12/31/2011?$

b What is the horizon value as of $12/31/2011?$

c What is the value of operations as of $12/31/2010?$

d What is the total value of the company as of $12/31/2010?$

e What is the intrinsic price per share for $12/31/2010?$

Lioi Steel Fabricators

Income Statement

For the year ending

Actual Projected

$20102011$

Net sales $$500\mathrm{.}0$ $$530\mathrm{.}0$

Costs $($except depreciation$)360\mathrm{.}0381\mathrm{.}6$

Depreciation $37\mathrm{.}539\mathrm{.}8$

Total operating expenses $$397\mathrm{.}5$ $$421\mathrm{.}4$

Earnings before interest and taxes $$102\mathrm{.}5$ $$108\mathrm{.}6$

Less interest $13\mathrm{.}916\mathrm{.}0$

Earnings before taxes $$88\mathrm{.}6$ $$92\mathrm{.}6$

Taxes $40\%35\mathrm{.}437\mathrm{.}0$

Net income before preferred dividends $$53\mathrm{.}2$ $$55\mathrm{.}6$

Preferred dividends $6\mathrm{.}07\mathrm{.}4$

Net income allocable for common dividends $$47\mathrm{.}2$ $$48\mathrm{.}2$

Common dividends $$40\mathrm{.}8$ $$29\mathrm{.}7$

Addition to retained earnings $$6\mathrm{.}418\mathrm{.}5$

Number of shares $1010$

Dividends per share $$4\mathrm{.}1$ $$3\mathrm{.}0$

Lioi Steel Fabricators

Balance Sheet

For the year ending

Actual Projected

$20102011$

Assets

Cash $$5\mathrm{.}3$ $$5\mathrm{.}6$

Marketable securities $49\mathrm{.}951\mathrm{.}9$

Accounts receivable $53\mathrm{.}056\mathrm{.}2$

Inventories $106\mathrm{.}0112\mathrm{.}4$

Total current assets $$214\mathrm{.}2$ $$226\mathrm{.}1$

Net plant and equipment $375\mathrm{.}0397\mathrm{.}5$

Total assets $$589\mathrm{.}2$ $$623\mathrm{.}6$

Liabilities and Equity

Accounts payable $$9\mathrm{.}6$ $$11\mathrm{.}2$

Notes payable $69\mathrm{.}974\mathrm{.}1$

Accruals $27\mathrm{.}528\mathrm{.}1$

Total current liabilities $$107\mathrm{.}0$ $$113\mathrm{.}4$

Long$-$term bonds $140\mathrm{.}8148\mathrm{.}2$

Preferred stock $35\mathrm{.}037\mathrm{.}1$

Common stock $($par plus PIC$)160\mathrm{.}0160\mathrm{.}0$

Retained earnings $146\mathrm{.}4164\mathrm{.}9$

Common equity $$306\mathrm{.}4$ $$324\mathrm{.}9$

Total liabilities and equity $$589\mathrm{.}2$ $$623\mathrm{.}6$

$$0\mathrm{.}0$ $$0\mathrm{.}0$