Using the following information, answer the following questions. Cumberlands cash flow statement for 2014.

Cumberland Industries December 31 Balance Sheets
(in thousands of dollars)
				2014	2013
Assets
Cash and cash equivalents				$91,450	$74,625
Short-term investments				$11,400	$15,100
Accounts Receivable				$103,365	$85,527
Inventories				$38,444	$34,982
Total current assets				$244,659	$210,234
Net fixed assets				$67,165	$42,436
Total assets				$311,824	$252,670
Liabilities and equity
Accounts payable				$30,761	$23,109
Accruals				$30,477	$22,656
Notes payable				$16,717	$14,217
Total current liabilities				$77,955	$59,982
Long-term debt				$76,264	$63,914
Total liabilities				$154,219	$123,896
Common stock				$100,000	$90,000
Retained Earnings				$57,605	$38,774
Total common equity				$157,605	$128,774
Total liabilities and equity				$311,824	$252,670

Income Statements

				2014	2013
Sales				$455,150	$364,120
Expenses excluding depreciation and amortization				$386,878	$321,109
EBITDA				$68,273	$43,011
Depreciation (Cumberland has no amortization charges)				$7,388	$6,752
EBIT				$60,884	$36,259
Interest Expense				$8,575	$7,829
EBT				$52,309	$28,430
Taxes (40%)				$20,924	$11,372
Net Income				$31,386	$17,058
Common dividends				$12,554	$6,823
Addition to retained earnings				$18,831	$10,235

Question 1. (5 points)

Calculate Cumberlands net operating working capital (NOWC), total net operating capital (TNOC), net operating profit after taxes (NOPAT), and free cash flow (FCF) for Year 2014.

Question 2. (2 points)

Cumberlands cost of capital is 16%. Calculate the companys 2014 ROIC. Does Cumberlands growth add value?

ROIC=

Question 3. (8 points)

Hope Industries just paid a dividend of $2.00 per share (i.e., D₀ = $2.00). Analysts expect the company's dividend to grow 15 percent this year (i.e., D₁ = $2.40), and 10 percent next year. After two years the dividend is expected to grow at a constant rate of 6 percent. The risk free rate is 4% and market risk premium is 5% and the firm is as risky as market. What should be the current price of the company's stock?