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Consider the case of Flying Cow Aviation: Next year, Flying Cow is expected to earn...

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Consider the case of Flying Cow Aviation: Next year, Flying Cow is expected to earn an EBIT of $4,000,000, and to pay a federal-plus-state tax rate of 30%. It also expects to make $1,000,000 in new capital expenditures to support this level of business activity, as well as $45,000 in additional net operating working capital (NOWC). Given these expectations, it is reasonable to conclude that next year Flying Cow will generate an annual free cash flow (FCF) of (rounded to the nearest whole dollar). Next, based on your estimate of Flying Cow's next year's FCF and making the stated assumptions, complete the following table: Flying Cow can sustain this annual FCF forever, the company has a weighted average cost of capital of 11.70% the company does not currently own any marketable securities there are 67,500 shares of Flying Cow outstanding, the company's value of debt is 45% of its total entity value, and the company's value of preferred shares is 25% of its total entity value. Value Attributes of Flying Cow Total Entity Valu Value of Common Equity Intrinsic value (per share)

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