If I assume the WACC= 9% and a growth rate of 5% after year 1.  

What would the FCF for Year 1 be? 

What would the market value of the common stock be? 

 

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3. ($ millions) Sales Actual Forecast X 0 Xr1 $ 500 530 EBT Operating Costs EBIT Interest Expense Taxes (25%) 250 260 250 280 8 20 242 260 60.5 65 Net Income $ 181.5 195 Dividends 166.3 170 Add to RE 15.2 25 Balance Sheet Cash $ 20 10 Receivables 82 83 Inventories 100 108 Current Assets 202 201 Net Fixed Assets 145 175 Total Assets 347 376 Accounts Payable 40 60 Notes Payable 10 15 Accruals 23 20 Current Liabilities 73 95 Bonds 70 60 Common Stock 160 142 Retained Earnings 54 79 Total Liab & Eq $ 347 376 3. ($ millions) Sales Actual Forecast X 0 Xr1 $ 500 530 EBT Operating Costs EBIT Interest Expense Taxes (25%) 250 260 250 280 8 20 242 260 60.5 65 Net Income $ 181.5 195 Dividends 166.3 170 Add to RE 15.2 25 Balance Sheet Cash $ 20 10 Receivables 82 83 Inventories 100 108 Current Assets 202 201 Net Fixed Assets 145 175 Total Assets 347 376 Accounts Payable 40 60 Notes Payable 10 15 Accruals 23 20 Current Liabilities 73 95 Bonds 70 60 Common Stock 160 142 Retained Earnings 54 79 Total Liab & Eq $ 347 376