Today is January 1, 2023. You estimate the following for A2Z's future financials (C$ million):

 

Year	2023E	2024E	2025E
Revenue	950	962	972
Costs	825	835	845
Depreciation	65	65	70
Capital Expenditures	90	90	90
Change in NWC	-10	-10	-10

You expect that after 2025, A2Z's free cash flows will grow at 3% per year in perpetuity. A2Z has 10 million shares outstanding, C$100M of debt, and C$10M in cash. Its weighted average cost of capital is 10%. The firm expects to face a tax rate of 20% on profits:

 

a. Calculate a target share price using these assumptions?

 

b. Conduct a sensitivity analysis by creating a table of equity values for discount rates r equal to 8%, 8.5%, 9%... all the way to 12% and for growth rates g between of 3%, 3.5%,..., 7%. Provide some intuition for the pattern that you see?