Question: Use the table for the question(s) below. FCF Forecast ($ million) Year 0 Sales 240 Growth vs. Prior Year EBIT (10% of Sales) Less: Income

 Use the table for the question(s) below. FCF Forecast ($ million)

Use the table for the question(s) below. FCF Forecast ($ million) Year 0 Sales 240 Growth vs. Prior Year EBIT (10% of Sales) Less: Income Tax (37%) Less: Increase in NWC (12% of Change in Sales). Free Cash Flow 1 270 12.5% 27.00 (9.99) 3.6 13.41 2 290 7.4% 29.00 10.73 2.4 15.87 3 310 6.9% 31.00 11.47 2.4 17.13 4 325.5 5.0% 32.55 12.44 1.86 18.65 Banco Industries expect sales to grow at a rapid rate over the next three years, but settle to an industry growth rate of 4% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. If Banco industries has a weighted average cost of capital of 10%, $50 million in cash, $60 million in debt, and 18 million shares outstanding, which of the following is the best estimate of Banco's stock price at the start of year 1? A. $14.54 B. $26.17 C. $7.27 D. $13.09

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