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Analytical Methods in Finance Review for Quiz 3 042511

# Analytical Methods in Finance Review for Quiz 3 042511 -...

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Analytical Methods in Finance: Quiz 3 SHOW YOUR WORK Name: _____________________________________________ 1. Sora Industries has 60 million outstanding shares, \$120 million in debt, 40 million in cash and the following projected free cash flow for the next four years: 0 1 2 3 4 5 COGS/Sales 0.67 Sales \$433.00 468 516 547 574.3 0.2 Growth 8.08% 10.26% 6.01% 4.99% Tax rate 0.4 COGS 313.6 345.7 366.5 384.8 Shares 60 Gross Profit 154.4 170.3 180.5 189.5 Debt 120 93.6 103.2 109.4 114.9 Cash 40 Depreciation 7.0 7.5 9.0 9.5 Long run growth 0.05 EBIT 53.8 59.6 62.1 65.2 WACC 0.1 less taxes (40%) 21.5 23.8 24.8 26.1 NWC/Sales t=0 0.18 plus Depreciation 7.0 7.5 9.0 9.5 NWC/Sales 0.18 less CapX 7.7 10.0 9.9 10.4 Less: Change NWC 6.3 8.6 5.6 4.9 Free Cash Flow 25.3 24.6 30.8 33.3 1.1. Suppose Sora’s revenues and free cash flow are expected to grow at 5% rate beyond year 4. If Sora’s WACC is 10%, what is Sora’s value and what is Sora’s stock price today? 1.2. Sora’s cost of goods sold was assumed to be 67%. If COGS are actually 70% of sales, what is the changed value the company and what is the value of its stock

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Analytical Methods in Finance Review for Quiz 3 042511 -...

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