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Use the table for the question(s) below. FCF Forecast ($ million) Year 0 Sales 240 Growth versus Prior Year EBIT (10% of Sales) Less: Income

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Use the table for the question(s) below. FCF Forecast ($ million) Year 0 Sales 240 Growth versus Prior Year EBIT (10% of Sales) Less: Income Tax (37%) Less: Increase in NWC (12% of Change in Sales). Free Cash Flow 1 270 12.5% 27.00 (9.99) 3.6 13.41 2 290 7.4% 29.00 10.73 2.4 15.87 3 310 6.9% 31.00 11.47 2.4. 17.13 4 325.5 5.0% 32.55 12.44 1.86 18.65 Banco Industries expect sales to grow at a rapid rate over the next 3 years, but settle to an industry growth rate of 5% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. Banco industries has a weighted average cost of capital of 12%, $30 million in cash, $70 million in debt, and 18 million shares outstanding. If Banco Industries can reduce their operating expenses so that EBIT becomes 12% of sales, by how much will their stock price increase? A. $8.40 B. $3.36 C. $4.90 OD. $2.80

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