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Unicorn L t d operates a chain o f home furnishing stores around the country. You have been provided with the following projections for the

Unicorn Ltd operates a chain of home furnishing stores around the country. You have been provided with the following projections for the company (in millions of Rupees)
1
2
34(Terminal
{Horizon} year)
EBIT 110.00125.00156.25172
Net Cap Ex3037.546.532
Total Working Capital
60
70
82
90
Cost of Equity 12%11%11%10%
Pre-tax Cost of Debt 8%9%10%9%
Percentage of Debt 20%25%30%25%
The company has a tax rate of30%,
The firm will grow at5% forever, starting in year 4. The working capital currently is50 million.
a. Estimate the expected cash flows to the firm for years 1-4.
b. Estimate the cost of capital each year for years 1-4.
c. Estimate the terminal (Horizon) value.
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