The financial statements of Lioi Steel Fabricators are shown below, with the actual results for 2004 and the projections for 2005. Free cash flow is expected to grow at a 6 percent rate after 2005. The weighted average cost of capital is 11 percent.

a. If operating capital as of 12/31/2004 is $502.2 million, what is the free cash flow for 12/31/2005?

b. What is the horizon value as of 12/31/2005?

c. What is the value of operations as of 12/31/2004?

d. What is the total value of the company as of 12/31/2004?

e. What is the price per share for 12/31/2004?

Income Statement for the Year Ending December 31

(Millions of Dollars Except for Per Share Data)

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Projected Actual 2004 2005 Net sales $500.0 $530.0 Costs (cxcept depreciation) 360.0 381.6 37.5 39.8 Depreciation Total opcrating costs $397.5 421.4 Earnings before interest and tax $102.5 108.6 Less interest 13.9 16.0 Earnings before taxes $ 88.6 $ 92.6 Taxes (40%) 35.4 37.0 $ 53.2 $ 55.6 Net income before preferred dividends Preferred dividends 6.0 7.4 Net income avail. for common dividends $ 47.2 $ 48.2 $ 40.8 $ 29.7 Common dividends $ 18.5 Addition to retained carnings 6.4 Number of shares 10 10 $ 4.08 $ 2.97 Dividends per share Balance Sheets for December 31 (Millions of Dollars) Actual Projected 2005 2004 Assets $ 5.3 $ 5.6 Cash Marketable securities 49.9 51.9 56.2 Accounts reccivable 53.0 Inventories 106.0 112.4 Total current assets $214.2 $226.1 Net plant and equipment 375.0 397.5 Total assets $589.2 $623.6 Liabilities and Equity $ 9.6 $ 11.2 Accounts payable Notes payable 74.1 69.9 Accruals 27.5 28.1 Total current liabilities $107.0 $113.4 Long-term bonds 140.8 148.2 Preferred stock 37.1 35.0 Common stock (par plus PIC) 160.0 160.0 Retained carnings 146.4 164.9 Common cquity Total liabilities and cquity $306.4 $324.9 $589.2 $623.6