Question: Use the table for the question(s) below. 3 1 290 2 310 4 325.5 12.5% 7.4% 6.9% FCF Forecast ($ million) Year 0 Sales 240

 Use the table for the question(s) below. 3 1 290 2

Use the table for the question(s) below. 3 1 290 2 310 4 325.5 12.5% 7.4% 6.9% FCF Forecast ($ million) Year 0 Sales 240 270 Growth versus Prior Year EBIT (10% of Sales) Less: Income Tax (37%) Less: Increase in NWC (12% of Change in Sales). Free Cash Flow 31.00 11.47 27.00 (9.99) 3.6 15.87 29.00 10.73 2.4 17.13 5.0% 32.55 12.44 1.86 2.4 13.41 18.65 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 10%, $50 million in cash, $70 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? O A. $7.44 B. $18.61 C. $10.86 O D. $6.20

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