#9 (30 points) Use the information below to answer the questions below. You have been hired as a consultant to develop a valuation model for Terrapins, Inc. Management has provided you with partial income statement and balance sheet Assume that all cash on the balance sheet is "excess cash" Below is information for the most recent year (2019, year 0) and projected information for the next year. Value the company as at the end of 2019 (year 0). All numbers are in millions. After 2020, the firm is expected to grow at 3% growth rate The weighted average cost of capital (WACC) is 12% WACC The tax rate 25% tax rate The number of shares outstanding (in millions) is 200 number of shares Calculate the Free Cash Flow for 2020; then answer a. and b. below a. What is the Enterprise Value of Terrapins? b. What is Terrapins' estimated price per share? (Actual) Forecasted Income Statement 2019 2020 ($ millions) Revenues 10,000 11,000 Cost of Goods Sold 6,000 6,600 Depreciation expense 200 240 SG&A expense 1,200 1,320 EBIT 2,600 2,840 Interest expense 100 100 Earnings before taxes 2,500 2,740 Taxes 625 685 Net Income 1,875 2,055 Balance Sheet Assets Cash 2,300 2,484 Accounts Receivable 3,400 3,672 Inventory 1,250 1,350 Total Current Assets 6,950 7,506 Gross PPE 14,500 15,660 Accumulated Depreciation 3,000 3,240 Net PPE 11,500 12,420 Total Assets 18,450 19,926 Liabilities & Equity Accounts Payable 1,335 1,442 Long Term Debt 6,115 7,340 Common Stock 1,000 1,000 Retained Earnings 10,000 10,144 Total Shareholder's Equity 11,000 11,144 Total Liabilities & Shareholders' Equity 18,450 19,926 Number of shares 200