Please explain to me how this correct answer was found I have the problem posted with the correct answers and work given but it does not show me how everything was calculated I would appreciate somebody does this in excel showcasing the formulas, thanks Problem 8 10 You are building a free cash flow to the firm model You expect sales to grow from $2 billion for the year that just ended to $4 billion five years from now Assume that the company will not become any more or less efficient in the future Use the following information to calculate the value of the equity on a per share basis Assume that the company currently has $720 million of net PP E The company currently has $240 million of net working capital The company has operating margins of 10 percent and has an effective tax rate of 31 percent The company has a weighted average cost of capital of 8 percent This is based on a capital structure of two thirds equity and one third debt The firm has 1 million shares outstanding Do not round intermediate calculations Round your answer to the nearest cent $ Hide Feedback Incorrect Post Submission Feedback Solution Sales (millions) $2,000 Growth for 5 years (4 2) 1 5 1 14 87 Operating margins 10 Tax rate 31 WACC 8 PP E Sales ($720 $2,000) 36 NWC Sales ($240 $2,000) 12 ($ millions) Year 1 2 3 4 5 6 Sales $2,297 40 $2,639 02 $3,031 43 $3,482 20 $4,000 00 $4,594 79 EBIT $229 74 $263 90 $303 14 $348 22 $400 00 $459 48 Taxes $71 22 $81 81 $93 97 $107 95 $124 00 $142 44 NOPAT $158 52 $182 09 $209 17 $240 27 $276 00 $317 04 Net Cap Ex $107 06 $122 98 $141 27 $162 28 $186 41 $214 13 Change in NWC $35 69 $40 99 $47 09 $54 09 $62 14 $71 38 FCF $15 77 $18 11 $20 81 $23 90 $27 46 $31 54 Terminal Value $394 25 PV of Cash Flows $14 60 $15 53 $16 52 $17 57 $287 01 EV $351 23 Less Debt (1 3 of EV) $117 08 Equity Value $234 15 Equity Value per Share $234 15 million 1 million shares $234 15 Note While the calculations above show values rounded to 2 decimal places, unrounded values should be used to calculate the required values

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Question: Please explain to me how this correct answer was found. I have the problem posted with the correct answers and work given but it does

Please explain to me how this correct answer was found. I have the problem posted with the correct answers and work given but it does not show me how everything was calculated. I would appreciate somebody does this in excel showcasing the formulas, thanks.

Problem 8-10

You are building a free cash flow to the firm model. You expect sales to grow from $2 billion for the year that just ended to $4 billion five years from now. Assume that the company will not become any more or less efficient in the future. Use the following information to calculate the value of the equity on a per-share basis.

Assume that the company currently has $720 million of net PP&E.
The company currently has $240 million of net working capital.
The company has operating margins of 10 percent and has an effective tax rate of 31 percent.
The company has a weighted average cost of capital of 8 percent. This is based on a capital structure of two-thirds equity and one-third debt.
The firm has 1 million shares outstanding.

Do not round intermediate calculations. Round your answer to the nearest cent.

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Solution

Sales (millions)	$2,000
Growth for 5 years = (4/2)^1/5-1	14.87%
Operating margins	10%
Tax rate	31%
WACC	8%
PP&E/Sales ($720/$2,000)	36%
NWC/Sales ($240/$2,000)	12%

($ millions)

Year	1	2	3	4	5	6
Sales	$2,297.40	$2,639.02	$3,031.43	$3,482.20	$4,000.00	$4,594.79
EBIT	$229.74	$263.90	$303.14	$348.22	$400.00	$459.48
Taxes	-$71.22	-$81.81	-$93.97	-$107.95	-$124.00	-$142.44
NOPAT	$158.52	$182.09	$209.17	$240.27	$276.00	$317.04
Net Cap Ex	-$107.06	-$122.98	-$141.27	-$162.28	-$186.41	-$214.13
Change in NWC	-$35.69	-$40.99	-$47.09	-$54.09	-$62.14	-$71.38
FCF	$15.77	$18.11	$20.81	$23.90	$27.46	$31.54
Terminal Value					$394.25
PV of Cash Flows	$14.60	$15.53	$16.52	$17.57	$287.01
EV	$351.23
Less Debt (1/3 of EV)	-$117.08
Equity Value	$234.15

Equity Value per Share = $234.15 million / 1 million shares = $234.15

Note: While the calculations above show values rounded to 2 decimal places, unrounded values should be used to calculate the required values.

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