Question: Using the information in Exhibit 1 below, calculate North Rocks Free Cash flow for the year 2019 (in $ millions). Exhibit 1 North Rock Selected

Using the information in Exhibit 1 below, calculate North Rocks Free Cash flow for the year 2019 (in $ millions). Exhibit 1 North Rock Selected Financial Information for the 2019 Period (All amounts are in $ millions except where stated)

Current EBIT (2019) $350.00

Interest Expense $8.45

Interest Paid $8.45

Dividends Paid $2.11

Tax rate (%) 35

Increase (Decrease) in accounts receivable $15.80

Increase (Decrease) in accounts payable $(10.25) I

ncrease (Decrease) in inventory $17.98

Fixed Capital Investment $25.50

Debt 100

Cash 20

Number of shares outstanding 10

2. Suppose that North Rock forecasts that its free cash will be $200 million in 2020, $220 million in 2021 and $250 million in 2022. After 2022 North Rock expects its free cash flow, earnings will grow at an annual rate of 6%. If North Rocks weighted average cost of capital is 15%, and using information in exhibit 1 what is the value of North Rocks stock based on this information?

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