Year 0 2. EBIT Depreciation Net capital expenditures Total net working capital (NWC) $300 22 60 23 $330 25 65 27 $350 31 70 32 $20 $1,000 Value of total debt Tax rate = 25% Number of shares outstanding 30 *EBIT = Earnings before interest and taxes = Revenues - Total costs - Depreciation Firm Q has no preferred stock. Use information below to find the firm's required rate of return (or weighted average cost of capital). Long-term bond rate (i.e., risk-free rate) = 5 percent Market risk premium = 6 percent Beta of stock = 1.60 Before-tax cost of debt = 8 percent Debt-to-equity ratio = 1.0 Tax rate = 25 percent a) Compute the firm's required rate of return (i.e., the firm's weighted average cost of capital). b) Find the free cash flow to the firm for Firm Q for each year from year I to year 3. c) Firm Y is a comparable firm to Firm Q. You estimate Firm Y's EBITDA multiple in year 3 to be 12. Find the stock price per share of Firm Qusing free cash flows from year I to year 3 from (b), the terminal value (or continuing value) calculated from the comparable- 3 multiple approach, and the required rate of return from (a). Note that EBITDA stands for earnings before interest, taxes, depreciation, and amortization and Firm Y's EBITDA Value of Firm Y multiple is defined as Firm Y'S EBITDA