Question 1 Parts C, D, E, and F are based on the following information

MBA, Inc. reported the following financial information for the fiscal years 2019 to 2020:

Exhibit 1. Financial Statement Information

	Year 2019	Year 2020
EBIT	180	210
Interest Expense	20	20
Effective Tax Rate	35%	35%
Depreciation	40	40
Fixed Assets (NPPE or Net Property Plant and Equipment)	430	550
Current Assets	320	420
Current Liabilities	240	370
Book Equity	600	800
Long-term Debt	300	400

Financial market information and other assumptions of this company are provided below:

Exhibit 2. Other Information and Assumptions

Beta (b ) note: this is also the Levered Beta	1.8
Market rate of return (rm)	10%
Risk-free rate (rf)	4%
Cost of Debt (rD)	7%
Effective Tax Rate	35%
Corporate Tax rate (tC)	35%

Based on the above information, answer Question 1 Parts, C, D, E, and F on the next page (see page 5 for questions).

Question 1 - Part C. [14%]

Given the information provided on page 4, calculate the Free Cash Flow in Year 2020.

In addition, provide interpretations of the result of Free Cash Flow (FCF) in Year 2020.

Question 1 - Part D. [14%]

Given the information provided on page 4, calculate the Residual Earnings in Year 2020.

In addition, provide interpretations of the result of Residual Earnings in Year 2020.

Question 1 - Part E. [14%]

Given the information provided on page 4, calculate the Economic Profit in Year 2020.

In addition, provide interpretations of the result of Economic Profit in Year 2020.

Question 1 - Part F. [8%]

Based on your analyses and the financial information of MBA, Inc. (see pp. 3 to 4), would you (as a financial analyst) recommend investing in the stock of MBA, Inc.?

Importantly, support your stock recommendation above by providing two (2) different reasons/arguments.