We find the following information on NPNG (No-Pain-No-Gain) Inc.

• EBIT = $2,000,000
• Depreciation = $250,000
• Change in net working capital = $100,000
• Net capital spending = $300,000

These numbers are projected to increase at the following supernormal rates for the next three years, and 5% after the third year for the foreseeable future:

• EBIT: 10%
• Depreciation: 15%
• Change in net working capital: 20%
• Net capital spending: 15%

The firms tax rate is 35%, and it has 1,000,000 outstanding shares and $6,000,000 in debt. We have estimated the WACC to be 15%.

a. Calculate the EBIT, Depreciation, Changes in NWC, and Net Capital Spending for the next four years.

b. Calculate the CFA* for each of the next four years, using the following formula:

CFA* = EBIT(1 T) + Depr NWC NCS

d. Calculate the present value of growing perpetuity at Year 3.