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Assume that you have just completed the valuation of Mercury Athletic using the Discounted Cash Flow approach to valuation as discussed in class, and that Nicole Spataro, an ITAM alumna now working for Morgan Stanley's Investment Banking group seeks to test how well you understand valuation. Moreover, the accuracy and quality of your analysis will help her determine whether she hires you or not as an intern. According to Nicole your estimates for FCF for each of the initial five years are correct and are $21,240 (all in thousands) for year 1, $26,727 for year 2, $22,097 for year 3, $25,493 for year 4 and $29,545 for year 5, respectively, as documented in class (see Excel). Your market numbers, as in class, are also correct at 4.93% for the risk free rate and 5% for the market risk- premium. Your estimates for the WACC are, however, incorrect as when you completed the case, you didn't know that Mercury Athletic's best and only relevant comparable company was D&B Shoe Company. Using this new information and the fact that the relevant debt beta for your comparable company is bd=0.1, what is the new WACC for Mercury Athletic assuming that the firm uses a 40% debt financing structure? The new after-tax WACC is (select the closest alternative): Elija su respuesta... What is the new terminal multiple for Mercury assuming a constant growth rate of 3%? The new terminal multiple is (select the closest alternative): Elija su respuesta.. The new Enterprise Value in millions is (select the closest alternative): Elija su respuesta... year=0 Revenue COGS Gross gross margin year=1 year=2 year=3 year=4 9,100,000 6,300,000 3,600,000 750,000 3,600,000 2,700,000 1,800,000 450,000 5,500,000 3,600,000 1,800,000 300,000 400,000 Design costs Depreciation Marketing SGA 125,000 125,000 125,000 125,000 600,000 2,730,000 1,890,000 1,080,000 225,000 EBIT Taxes 1,000,000 2,645,000 385,000 1,018,325 0.385 1,585,000 610,225 595,000 - 229,075 50,000 19,250 NOPAT 615,000 1,626,675 974,775 365,925 - 30,750 CAPEX Depreciation 500,000 125,000 125,000 125,000 125,000 Receivables Inventory, end 2,275,000 1,575,000 1,687,500 1,125,000 900,000 450,000 2,250,000 WC 2,250,000 3,962,500 2,700,000 1,350,000 Free cash flow 3,365,000 39,175 2,362,275 1,840,925 1,444,250 Discount rate 10.5%

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