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2 3 4 290 310 325.5 Use the table for the question(s) below. FCF Forecast ($ million) Year 0 1 Sales 240 270 Growth versus Prior Year 12.5% EBIT (10% of Sales) 27.00 Less: Income Tax (37%) (9.99) Less Increase in NWC (12% of Change 3.6 in Sales). Free Cash Flow 13.41 7.4% 6.9% 5.0% 29.00 31.00 32.55 (10.73) (11.47) (12.44) 2.4 2.4 1.86 15.87 17.13 18.65 Banco Industries expect sales to grow at a rapid rate over the next 3 years, but settle to an industry growth rate of 5% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. Banco industries has a weighted average cost of capital of 11%, $40 million in cash, $70 million in debt, and 18 million shares outstanding. If Banco Industries can reduce its operating expenses so that EBIT becomes 12% of sales, by how much will its stock price increase? $3.27 $3.92 $5.72 $9.80 Use the table for the question(s) below. Name Market Enterprise Enterprisenterprise Capitalization Value ($ Price/ Value/ Value/ ($ million) million) P/E Book Sales EBITDA Gannet 6350 10,163 7.36 0.73 1.4 5.04 New York Times 2423 3472 18.09 2.64 1.10 7.21 McClatchy 675 3061 9.76 1.68 1.40 5.64 Media General 326 1192 14.89 0.39 1.31 7.65 Lee Enterprises 267 1724 6.55 0.82 1.57 6.65 Average 11.33 1.25 1.35 6.44 Maximum +60% 112% +16% +22% Minimum -40% -69% -18% - 19% The table above shows the stock prices and multiples for a number of firms in the newspaper publishing industry. Another newspaper publishing firm (not shown) had sales of $640 million, EBITDA of $84 million, excess cash of $67 million, $14 million of debt, and 120 million shares outstanding. If the average enterprise value to sales for comparable businesses is used, which of the following is the range of reasonable share price estimates? $6.27 to $8.86 $4.59 to $12.23 $1.15 to $1.53 $6.19 to $9.32 Use the table for the question(s) below. Name Market Enterprise Enterprisenterprise Capitalization Value ($ Price/ Value/ Value/ ($ million) million) P/E Book Sales EBITDA Gannet 6350 10,163 7.36 0.73 1.4 5.04 New York Times 2423 3472 18.09 2.64 1.10 7.21 McClatchy 675 3061 9.76 1.68 1.40 5.64 Media General 326 1192 14.89 0.39 1.31 7.65 Lee Enterprises 267 1724 6.55 0.82 1.57 6.65 Average 11.33 1.25 1.35 6.44 Maximum +60% 112% +16% +22% Minimum -40% -69% - 18% -19% The table above shows the stock prices and multiples for a number of firms in the newspaper publishing industry. Another newspaper publishing firm (not shown) had sales of $620 million, EBITDA of $81 million, excess cash of $62 million, $11 million of debt, and 120 million shares outstanding. If the firm had an EPS of $0.41, what is the difference between the estimated share price of this firm if the average price-earnings ratio is used and the estimated share price if the average enterprise value/EBITDA ratio is used? -$0.08 -$0.13 -$1.27 -$1.39 Use the table for the question(s) below. 2 3 4 290 310 325.5 5.0% FCF Forecast ($ million) Year 0 1 Sales 240 270 Growth versus Prior Year 12.5% EBIT (10% of Sales) 27.00 Less: Income Tax (37%) (9.99) Less Increase in NWC (12% of Change in Sales). Free Cash Flow 13.41 7.4% 29.00 6.9% 31.00 32.55 10.73 11.47 12.44 3.6 2.4 2.4 1.86 15.87 17.13 18.65 Banco Industries expect sales to grow at a rapid rate over the next three years, but settle to an industry growth rate of 5% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. If Banco industries has a weighted average cost of capital of 11%, $50 million in cash, $80 million in debt, and 18 million shares outstanding, which of the following is the best estimate of Banco's stock price at the start of year 1? $6.52 $11.74 o o $13.04 $23.48 2 3 4 290 310 325.5 Use the table for the question(s) below. FCF Forecast ($ million) Year 0 1 Sales 240 270 Growth versus Prior Year 12.5% EBIT (10% of Sales) 27.00 Less: Income Tax (37%) (9.99) Less Increase in NWC (12% of Change 3.6 in Sales). Free Cash Flow 13.41 7.4% 6.9% 5.0% 29.00 31.00 32.55 (10.73) (11.47) (12.44) 2.4 2.4 1.86 15.87 17.13 18.65 Banco Industries expect sales to grow at a rapid rate over the next 3 years, but settle to an industry growth rate of 5% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. Banco industries has a weighted average cost of capital of 11%, $40 million in cash, $70 million in debt, and 18 million shares outstanding. If Banco Industries can reduce its operating expenses so that EBIT becomes 12% of sales, by how much will its stock price increase? $3.27 $3.92 $5.72 $9.80 Use the table for the question(s) below. Name Market Enterprise Enterprisenterprise Capitalization Value ($ Price/ Value/ Value/ ($ million) million) P/E Book Sales EBITDA Gannet 6350 10,163 7.36 0.73 1.4 5.04 New York Times 2423 3472 18.09 2.64 1.10 7.21 McClatchy 675 3061 9.76 1.68 1.40 5.64 Media General 326 1192 14.89 0.39 1.31 7.65 Lee Enterprises 267 1724 6.55 0.82 1.57 6.65 Average 11.33 1.25 1.35 6.44 Maximum +60% 112% +16% +22% Minimum -40% -69% -18% - 19% The table above shows the stock prices and multiples for a number of firms in the newspaper publishing industry. Another newspaper publishing firm (not shown) had sales of $640 million, EBITDA of $84 million, excess cash of $67 million, $14 million of debt, and 120 million shares outstanding. If the average enterprise value to sales for comparable businesses is used, which of the following is the range of reasonable share price estimates? $6.27 to $8.86 $4.59 to $12.23 $1.15 to $1.53 $6.19 to $9.32 Use the table for the question(s) below. Name Market Enterprise Enterprisenterprise Capitalization Value ($ Price/ Value/ Value/ ($ million) million) P/E Book Sales EBITDA Gannet 6350 10,163 7.36 0.73 1.4 5.04 New York Times 2423 3472 18.09 2.64 1.10 7.21 McClatchy 675 3061 9.76 1.68 1.40 5.64 Media General 326 1192 14.89 0.39 1.31 7.65 Lee Enterprises 267 1724 6.55 0.82 1.57 6.65 Average 11.33 1.25 1.35 6.44 Maximum +60% 112% +16% +22% Minimum -40% -69% - 18% -19% The table above shows the stock prices and multiples for a number of firms in the newspaper publishing industry. Another newspaper publishing firm (not shown) had sales of $620 million, EBITDA of $81 million, excess cash of $62 million, $11 million of debt, and 120 million shares outstanding. If the firm had an EPS of $0.41, what is the difference between the estimated share price of this firm if the average price-earnings ratio is used and the estimated share price if the average enterprise value/EBITDA ratio is used? -$0.08 -$0.13 -$1.27 -$1.39 Use the table for the question(s) below. 2 3 4 290 310 325.5 5.0% FCF Forecast ($ million) Year 0 1 Sales 240 270 Growth versus Prior Year 12.5% EBIT (10% of Sales) 27.00 Less: Income Tax (37%) (9.99) Less Increase in NWC (12% of Change in Sales). Free Cash Flow 13.41 7.4% 29.00 6.9% 31.00 32.55 10.73 11.47 12.44 3.6 2.4 2.4 1.86 15.87 17.13 18.65 Banco Industries expect sales to grow at a rapid rate over the next three years, but settle to an industry growth rate of 5% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. If Banco industries has a weighted average cost of capital of 11%, $50 million in cash, $80 million in debt, and 18 million shares outstanding, which of the following is the best estimate of Banco's stock price at the start of year 1? $6.52 $11.74 o o $13.04 $23.48

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