Please read the instructions carefully and use the blue cells to provide your answers.

Part A:

Using today's actual financial statements (Year 0) and the assumptions given, please forecast the missing items in the Income Statement, Balance Sheet and the Free Cash Flow to the Firm for Linus Corp next year (Year 1) knowing that the company will:

repay $50 million in Short-Term Debt next year

not issue or buy back shares

use Long-Term Debt to adjust any imbalances in the Balance Sheet

Then perform a valuation and calculate a value for the company's shares today. Note: assume the long term growth rate applies after year 1.

Part B:

Complete the data table for the share price values given the different values for WACC and long term growth rate shown below.

Show in green text where you would be willing to invest if the current market price for the share is $50 per share.

\begin{tabular}{l|c|c|c|c|} \multicolumn{1}{c|}{} & \multicolumn{3}{c|}{ growth rate } \\ \cline { 2 - 5 } \multicolumn{2}{c|}{} & 2.5% & 3.0% & 3.5% \\ \cline { 2 - 5 } WACC & 11% & & & \\ \hline \multirow{2}{*}{ WAC } & 12% & & & \\ \hline & 13% & & & \\ \hline \end{tabular} \begin{tabular}{l|c|c|c|c|} \multicolumn{1}{c|}{} & \multicolumn{3}{c|}{ growth rate } \\ \cline { 2 - 5 } \multicolumn{2}{c|}{} & 2.5% & 3.0% & 3.5% \\ \cline { 2 - 5 } WACC & 11% & & & \\ \hline \multirow{2}{*}{ WAC } & 12% & & & \\ \hline & 13% & & & \\ \hline \end{tabular}