please show work for A,B, and C

3. The last page of the exam contains financial information for Spencer Sporting Goods (SSG). You are trying to value SSG. You have the financial statements (today's statements and 2 years of forecasted statements) as well as the following information: - You only feel comfortable forecasting the financial statements for the next two years - The company is currently at its target MV capital structure and is not expecting to deviate from this capital structure significantly in the foreseeable future - The company will exist well beyond this forecast period - The company does not have NOL carryforwards - The marginal tax rate for the firm is 40% - The YTM on the firm's interest-bearing debt is 7.5\%. Notes payable is the only interest-bearing debt at the firm. You can assume that the book value is a good approximation for the market value of the debt, both now and in the foresecable future - The firm is not currently generating (nor expects to generate) excess cash - Firms very similar to SSG have P/E ratios of 10. This price multiple is expected to remain unchanged in the foreseeable future - The closest firms to SSG (in terms of product market, customers, geography and capital structure) have an average WACC of 12% a. Forecast the FCFs of this firm for the next 2 years (but NOT for the current year... consider those sunk!). Show your work. (15 pts) b. (continued) Estimate a terminal value. State any assumptions that you make in computing this value. Show your work. (15p : ) c. Estimate the enterprise value of SSG. Show you work. (10 pts) \begin{tabular}{|c|c|c|c|} \hline \multicolumn{4}{|l|}{ Balance Sheet: } \\ \hline & Today & Year 1 & Yea 2 \\ \hline Cash & so & so & 50 \\ \hline Accounts receivbable, net & 1578 & 2209 & 3,093 \\ \hline Inventory & 806 & 1,129 & 1,581 \\ \hline Total current assets & 2434 & 3,388 & 4724 \\ \hline Fixedassets, net & 90 & 100 & 120 \\ \hline Deferred charges & 40 & 50 & 65 \\ \hline Other assets & 70 & 85 & 100 \\ \hline Total assets & 2634 & 3,623 & 5,009 \\ \hline Notes payable, bank & 1686 & 2468 & 3578 \\ \hline Accounts payable & 221 & 309 & 433 \\ \hline Mrscallaneous accruats & 100 & 130. & 160 \\ \hline Total current liabilities & 2007 & 2907 & 4,171 \\ \hline Stock-capital & 375 & 375 & 375 \\ \hline Retainedeamings. & 253 & 341. & 462 \\ \hline Total shareholder equity & 628 & 716 & 837 \\ \hline Total liablities and owners equity & 2634 & 3603 & 5,009 \\ \hline \multicolumn{4}{|l|}{ Income statement } \\ \hline & Today & Year 1 & Year 2 \\ \hline Net sales & 9600 & 13,440 & 18816 \\ \hline Cost of goods soll & 7898 & 11,057 & 15,480 \\ \hline Grossprofit & 1702 & 2383 & 3336 \\ \hline \multicolumn{4}{|l|}{ Openting, selling and } \\ \hline administrative expense & 1,344 & 1882 & 2634 \\ \hline Interest expense & 126 & 185 & 268 \\ \hline Profit before taxes & 231 & 31 & 433 \\ \hline Income taxes & 102. & 139 & 191 \\ \hline Profit after taxes & 129 & 17 & 243 \\ \hline Dividends paid & 65 & 88 & 21 \\ \hline \end{tabular}