1. We find the following information on NPNG (No-Pain-No-Gain) Inc. (18 marks total) EBIT = $2,000,000 Depreciation =...

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1. We find the following information on NPNG(No-Pain-No-Gain) Inc. (18 marks total)
EBIT = $2,000,000
Depreciation = $250,000
Change in net working capital = $100,000
Net capital spending = $300,000
These numbers are projected toincrease at the following supernormal rates for the next threeyears, and 5% after the third year for the foreseeablefuture:
EBIT: 10%
Depreciation: 15%
Change in net working capital: 20%
Net capital spending: 15%
The firm’s tax rate is 35%,and it has 1,000,000 outstanding shares and $6,000,000 in debt. Wehave estimated the WACC to be 15%.
a.   Calculate theEBIT, Depreciation, Changes in NWC, and Net Capital Spending forthe next fouryears.
**b.   Calculate theCFA* for each of the next four years, using the followingformula:
CFA* = EBIT(1 – T) + Depr –?NWC –NCS
d.   Calculate thepresent value of growing perpetuity at Year 3.                 (1 mark)
e.   Calculate thefirm’s value at time 0 using the WACC of the firm as the discountrate. (Note that the first CFA* to be discounted is the cash flowfrom one year into thefuture.)
f.   Calculate thefirm’s equity value at time0.                                                   (1 mark)
g.   Calculate thefirm’s share price at time0.                                          (1 mark)**

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abdpresent value of growing perpetuity at year 3 Year 4 CFA WACC constant growth ratepresent value of growing perpetuity at See Answer

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1. We find the following information on NPNG(No-Pain-No-Gain) Inc. (18 marks total)EBIT = $2,000,000Depreciation = $250,000Change in net working capital = $100,000Net capital spending = $300,000These numbers are projected toincrease at the following supernormal rates for the next threeyears, and 5% after the third year for the foreseeablefuture:EBIT: 10%Depreciation: 15%Change in net working capital: 20%Net capital spending: 15%The firm’s tax rate is 35%,and it has 1,000,000 outstanding shares and $6,000,000 in debt. Wehave estimated the WACC to be 15%.a. Calculate theEBIT, Depreciation, Changes in NWC, and Net Capital Spending forthe next fouryears. b. Calculate theCFA* for each of the next four years, using the followingformula:CFA* = EBIT(1 – T) + Depr –?NWC –NCS d. Calculate thepresent value of growing perpetuity at Year 3. (1 mark)e. Calculate thefirm’s value at time 0 using the WACC of the firm as the discountrate. (Note that the first CFA* to be discounted is the cash flowfrom one year into thefuture.) f. Calculate thefirm’s equity value at time0. (1 mark)g. Calculate thefirm’s share price at time0. (1 mark)