Question: Use the table for the question(s) below. 1 2 3 270 290 310 12.5% 7.4% 6.9% FCF Forecast ($ million) Year 0 4 Sales 240

 Use the table for the question(s) below. 1 2 3 270

Use the table for the question(s) below. 1 2 3 270 290 310 12.5% 7.4% 6.9% FCF Forecast ($ million) Year 0 4 Sales 240 325.5 Growth versus Prior Year 5.0% EBIT (10% of Sales) 32.55 Less: Income Tax (37%) 12.44 Less: Increase in NWC (12% of Change in Sales). 1.86 Free Cash Flow 18.65 27.00 29.00 31.00 (9.99) 10.73 11.47 3.6 2.4 2.4. 13.41 15.87 17.13 Banco Industries expect sales to grow at a rapid rate over the next 3 years, but settle to an industry growth rate of 7% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. Banco industries has a weighted average cost of capital of 13%, $40 million in cash, $80 million in debt, and 18 million shares outstanding. If Banco Industries can reduce their operating expenses so that EBIT becomes 12% of sales, by how much will their stock price increase? A. $5.44

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