Sora Industries has 60 million outstanding shares, $120 million in debt, $40 million in cash, and the following projected free cash flow for the next four years (see MyFinanceLab for the data in Excel format):

a. Suppose Sora's revenues and free cash flow are expected to grow at a 5% rate beyond year 4. If Sora's weighted average cost of capital is 10%, what is the value of Sora's stock based on this information?
b. Sora's cost of goods sold was assumed to be 67% of sales. If its cost of goods sold is actually 70% of sales, how would the estimate of the stock's value change?
c. Return to the assumptions of part (a) and suppose Sora can maintain its cost of goods sold at 67% of sales. However, the firm reduces its selling, general, and administrative expenses from 20% of sales to 16% of sales. What stock price would you estimate now? (Assume no other expenses, except taxes, are affected.)
*d. Sora's net working capital needs were estimated to be 18% of sales (their current level in year 0). If Sora can reduce this requirement to 12% of sales starting in year 1, but all other assumptions remain as in part (a), what stock price do you estimate for Sora?

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1 Yea 2 Earnings and FCF Forecast(S million) 3 Sales 4 Growth versus Prior Year 5 Cost of Goods Sold 6 Gross Profit 7 Selling, General, and Administrafve 8 Depreciation 9 EBIT 10 Less: Income Tax at 40% 11Plus: Depreciation 12 Less: Capital Expenditures 13 Less: Increase in NWO 14 Free Cash Flow 433.0468.0 516.0 5470 574.3 8.1% | 10.3% | 6.0% | 5.0% -313.6 -345.7 366.5 384.8 1544 70.3 1805 189.5 93.6-1032 109.4-114.9 9.5 538 59.6 62.1 65.2 24.8-26.1 7.0 7.5 9.09.5 9.9-10.4 -6.3 8.65.64.9 33.3 7.0 7.5 23.8 7.710.0 253 24.6 -9.0 21.5 30.8