Use the following information to solve the questions below:

Income Statement $($in millions$)$ of $2023$

Net Sales $ $800\mathrm{.}00$

Cost of Goods sold $ $100\mathrm{.}00$

Depreciation $ $300\mathrm{.}00$

EBIT $ $400\mathrm{.}00$

Interest Expense $ $100\mathrm{.}00$

EBT $ $300\mathrm{.}00$

Tax $ $75\mathrm{.}00$

Net Income $ $225\mathrm{.}00$

Balance sheet $($in millions$)$ of $2023$

LHS year year RHS year year

$2022202320222023$

Current Assets $600700$ Current liab. $300400$

Fixed Asset $700800$ Fixed Debt $450100$

Total equity $5501000$

Total Asset $13001500$ Total liab.$+$equity $13001500$

Additionally, note the following:

There are $10$ million shares outstanding

Free cash flow $($FCF$)$ and Earnings will grow at the constant rate of $2\%$

Firm's equity beta is $2\mathrm{.}50$

Risk$-$free rate is $4\%$ and market return is $13\%$

Total debt market value is same as the book value of debt

QUESTION #$1.$ Find the Free Cash Flow $($FCF$),$ using equation FCF $=$ EBIT$*(1-$t$)+$ DEP $-$ NCS $-$ CHG IN NWC$.$

We find that FCF is

$3500$r $550$ or $200$ or $400$ million dollars

QUESTION #$2.$ Find the asset beta

It is approximately $1\mathrm{.}09$ or $\mathrm{.}95$ or $1\mathrm{.}82$ or $1\mathrm{.}34$

QUESTION #$3.$ Find the discount rate $($k$)$

It is approximately $18\mathrm{.}73\%,15\mathrm{.}25\%,20\mathrm{.}36\%,11\mathrm{.}33\%$

Stock value per share using FCF model is therefore approximately

Question Blank $4$ of $9$

choose your answer of $110\mathrm{.}89,72\mathrm{.}09,61\mathrm{.}09,89\mathrm{.}89$ per share.

QUESTION #$5$ and #$6.$ Find the book value per share and the earnings per share

Book value per share is

Question Blank $5$ of $9$

choose your answer... $100,60,90,150$

and the earnings per share is

Question Blank $6$ of $9$

choose your answer... $32\mathrm{.}522\mathrm{.}512\mathrm{.}542\mathrm{.}5$

QUESTION #$7$ and #$8.$ Find the discount rate $($k$)$

For the RIM, We need to use the

Question Blank $7$ of $9$

choose your answer... asset, equity, debt, market

beta to find the required rate of return, which is

Question Blank $8$ of $9$

choose your answer... $16\mathrm{.}5\%,20\mathrm{.}5\%,10\mathrm{.}5\%,26\mathrm{.}5\%$

ind the stock value

Stock value per share using RIM model is therefore approximately

Question Blank $9$ of $9$

choose your answer... $25\mathrm{.}5,45\mathrm{.}5,85\mathrm{.}5,65\mathrm{.}5$

per share.

$.$

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