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Greenbriar Railcar Manufacturing of Lake Oswego has projected sales of $275 million next year. Costs (including depreciation) are expected to be 72 percent of sales. Depreciation and net investment are expected to be 3 percent and 8 percent of sales, respectively. Sales are expected to grow at 22 percent the following year, with the growth rate declining by 4 percentage points per year until the growth rate reaches 6 percent, where it is expected to drop to 4 percent the next year and remain there indefinitely. Greenbriar has debt of $115 million outstanding. There are 3.5 million shares of stock outstanding and investors require a return of 14 percent on the company's stock. The corporate tax rate is 21 percent. Your Name (s): Question 3 Greenbriar Value What is your estimate of the current stock price? That do you know? Year 1 Year 2 Growth rates, by year Year 3 Year 4 Year 5 Year 6 That else? Cash Flow Estimates: Year 1 Year Year Year 4 Year 5 Year Pirm Value at To? Equity Value at to? Part 2: Suppose instead that you estimate the terminal value of the company using a multiple of operating earnings. The industry operating multiple is 8x current year earnings. What is your new estimate of the company's stock price? Year 1 Year 2 S Year 3 Year 4 S Year 5 $ Year 6 S Cash flow S Firm Value at To? SO Equity Value at To