Using the forecast projections on Exhibit 10, calculate the Free Cash Flows in each year.

Assume the following for simplicity: Technically the deal is supposed to close mid 2012. Assume that the deal closes January 1, 2012 so that the 2012 forecast occurs one year from purchase. Assume that there are no tax-loss carry forwards in the deal and that these assets will get taxed at the full corporate tax rate of 35%. As always, you only really need to do this calculation for one year and Excel will do the rest via a copy-right. You will need to calculate a terminal value for the assets in 2016 using the 2017 estimated cash flow. For this calculation, assume that after 2016, cash flows will shrink by 2%. That is the company will have negative growth of - 2% indefinitely after that (a reasonable assumption given the state of the newspaper industry.) Assume a discount rate (WACC) of 10% for this calculation.

Exhibit 10 Cash Flow Forecasts for Media Generals Entire Newspaper Division (including The Tampa Tribune)

			Actual Results for the Year Ending 12/31						Forecast Results for the Year Ending 12/31
Item			2007A	2008A	2009A	2010A	2011A		2012F	2013F	2014F	2015F	2016F
Newspaper Revenues			$524.80	$436.90	$357.50	$328.40	$299.50		$287.10	$282.50	$288.10	$293.90	$299.80
	Revenue Growth Rate			-16.70%	-18.20%	-8.10%	-8.80%		-4.10%	-1.60%	2.00%	2.00%	2.00%
Operating Profit (EBIT)				$30.20	$40.10	$26.50	$6.30		$14.20	$13.70	$21.30	$28.10	$30.00
	Operating Margin			6.90%	11.20%	8.10%	2.10%		4.90%	4.80%	7.40%	9.60%	10.00%
Cash Flow Items:
	Deprec./Amortization			$27.70	$24.90	$22.80	$22.10		$20.00	$16.00	$12.00	$9.00	$6.00
	Capital Expenditures			$16.30	$6.20	$5.50	$3.50		$5.00	$5.50	$5.90	$6.00	$6.00
Balance Sheet Item:
	Net Working Capital		$26.20	$21.80	$17.90	$16.40	$15.00		$14.40	$14.10	$14.40	$14.70	$15.00