Zora Industries has 62 million outstanding share, $124 million in debt, $43 million in cash,...
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Zora Industries has 62 million outstanding share, $124 million in debt, $43 million in cash, and the following projected free cash flow for the next four years. Suppose Sora's revenue and free cash flow are expected to grow at a 5.7% rate beyond year 4. If Sora's weighted average cost of capital is 12.0%, what is the per share value of Sora's stock based on this information? Year 0 1 2 3 4 Earning & FCF Forecast ($millions) 1 Sales 433 468 516 547 574.3 2 Growth vs. Prior Year 8.1% 10.3% 6.0% 5.0% 3 Cost of Goods Sold (313.6) (345.7) (366.5) (384.8) 4 Gross Profit 154.4 170.3 180.5 189.5 (93.6) (114.9) 5 Selling, General & Admin. 6 Depreciation (103.2) (7.5) (109.4) (9.0) (7.0) (9.5) 7 EBIT 53.8 59.6 62.1 65.2 8 Less: Income tax at 40% (21.5) (23.8) (24.8) (26.1) 7 7.5 9 9.5 9 Plus: Depreciation 10 Less: Capital Expenditures (7.7) (10.4) (10.0) (8.6) (9.9) (5.6) 11 Less: Increases in NWC (6.3) (4.9) 12 Free Cash Flow 25.3 24.6 30.8 33.3 O $5.80 O $7.10 O $440.35 $558.70
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