0 1 1 2 3 4 e 433.0 Year Earnings and FCF Forecast ($ million) 1 Sales 2 Growth vs. Prior Year 3 Cost of Goods Sold 4 Gross Profit 5 Selling, General, & Admin. 6 Depreciation 7 EBIT 8 Less: Income Tax at 40% 9 Plus: Depreciation 10 Less: Capital Expenditures 11 Less: Increase in NWC 12 Free Cash Flow 468.0 8.1% (313.6) 154.4 (93.6) (7.0) 53.8 (21.5) 7.0 (7.7) (6.3) 25.3 516.0 10.3% (345.7) 170.3 (103.2) (7.5) 59.6 (23.8) 7.5 (10.0) (8.6) 24.6 547.0 6.0% (366.5) 180.5 (109.4) (9.0) 62.1 (24.8) 574.3 5.0% (384.8) 189.5 (114.9) (9.5) 65.2 (26.1) 9.0 9.5 (9.9) (5.6) 30.8 (10.4) (4.9) 33.3 133.0 Sora Industries has 66 million outstanding shares, $121 million in debt, $52 million in cash, and the following projected free cash flow for the next four years. Year 0 1 Earnings and FCF Forecast ($ million) 1 Sales 468.0 516,0 57, 0 5 741.3 2 Growth vs. Prior Year 8.1% 10.3% 6.0% 5.095 3 Cast of Goods Sold (313.6) (345.7) (366.5) 1384.8) 4 Gross Profit 154.4 170.3 180.5 189.5 5 Selling. General, & Admin. (93.8) (103.2) (109.4) (114.9) B Depreciatian (7.0) (7.5) 19.0) 19.5) 7 EBIT 53.B 59.8 62.1 65.2 a Less: Income Tax at 40% (21.5) (23.8) (24.a) (28.1) 9 Plus: Depreciation 70 7,5 10 Less: Capital Expenditures (7.7) (10.0) 19.9) (10.4) 900 95 a. Suppose Sora's revenue and free cash flow are expected to grow at a 3.2% rate beyond year four. If Sora's weighted average cost of capital is 13.0%, what is the value of Sora stock based on this information? The stock price for this case is $ 3.48 (Round to the nearest cent) b. Sara'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? The stock price for this case, when COGS increases, is $ . (Round to the nearest cent.) 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 seling, 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. The stock price for this case, when seling, general, and administrative costs decrease, is $ . (Round to the nearest cont.) d. Sara's net working capital needs were estimated to be 18% af sales (their current level in year zero). If Sora can reduce this requirement to 12% of sales starting in year 1, but all other assumptions are as in (a), what slock price do you estimate for Sara(flut: This change will have the largest impact on Sara's free cash flow in year 1.) The stock price for this case, when working capital needs are reduced, is S . (Round to the nearest cent.) 0 1 1 2 3 4 e 433.0 Year Earnings and FCF Forecast ($ million) 1 Sales 2 Growth vs. Prior Year 3 Cost of Goods Sold 4 Gross Profit 5 Selling, General, & Admin. 6 Depreciation 7 EBIT 8 Less: Income Tax at 40% 9 Plus: Depreciation 10 Less: Capital Expenditures 11 Less: Increase in NWC 12 Free Cash Flow 468.0 8.1% (313.6) 154.4 (93.6) (7.0) 53.8 (21.5) 7.0 (7.7) (6.3) 25.3 516.0 10.3% (345.7) 170.3 (103.2) (7.5) 59.6 (23.8) 7.5 (10.0) (8.6) 24.6 547.0 6.0% (366.5) 180.5 (109.4) (9.0) 62.1 (24.8) 574.3 5.0% (384.8) 189.5 (114.9) (9.5) 65.2 (26.1) 9.0 9.5 (9.9) (5.6) 30.8 (10.4) (4.9) 33.3 133.0 Sora Industries has 66 million outstanding shares, $121 million in debt, $52 million in cash, and the following projected free cash flow for the next four years. Year 0 1 Earnings and FCF Forecast ($ million) 1 Sales 468.0 516,0 57, 0 5 741.3 2 Growth vs. Prior Year 8.1% 10.3% 6.0% 5.095 3 Cast of Goods Sold (313.6) (345.7) (366.5) 1384.8) 4 Gross Profit 154.4 170.3 180.5 189.5 5 Selling. General, & Admin. (93.8) (103.2) (109.4) (114.9) B Depreciatian (7.0) (7.5) 19.0) 19.5) 7 EBIT 53.B 59.8 62.1 65.2 a Less: Income Tax at 40% (21.5) (23.8) (24.a) (28.1) 9 Plus: Depreciation 70 7,5 10 Less: Capital Expenditures (7.7) (10.0) 19.9) (10.4) 900 95 a. Suppose Sora's revenue and free cash flow are expected to grow at a 3.2% rate beyond year four. If Sora's weighted average cost of capital is 13.0%, what is the value of Sora stock based on this information? The stock price for this case is $ 3.48 (Round to the nearest cent) b. Sara'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? The stock price for this case, when COGS increases, is $ . (Round to the nearest cent.) 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 seling, 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. The stock price for this case, when seling, general, and administrative costs decrease, is $ . (Round to the nearest cont.) d. Sara's net working capital needs were estimated to be 18% af sales (their current level in year zero). If Sora can reduce this requirement to 12% of sales starting in year 1, but all other assumptions are as in (a), what slock price do you estimate for Sara(flut: This change will have the largest impact on Sara's free cash flow in year 1.) The stock price for this case, when working capital needs are reduced, is S . (Round to the nearest cent.)