Question 1: Determine the current market value of the assets, under the assumption that the free cash flow will grow at 1.5% in perpetuity after Year 5.
Question 2: What is the market value of equity implied by your assumptions?
What is the estimated share price if there are 100 million shares outstanding?
Is this firm currently over-leveraged or under-leveraged?
Question 3: How do your answers to Q9 change if the firm is able to streamline capacity such that Sales/Fixed Assets is at 150% throughout the horizon, and at the same time, they are able to keep SG&A at 10% of Sales for the entire forecast period as well? How much value is created by these changes?
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