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FCF Forecast is million Year 0 1 2 3 4 Sales 240 270 290 310 3255 Growth Ders Pior Year 125% 7.4% 5.0% ERIT (10% of Sales) 3240 34.80 37.20 3906 Less Income Tax (37%) (6.48 (696) (7.44) (7.31) Less Increase in NWC (12% of Change in Sales) 360 240 22:40 186 Free Cash Flow 22.32 25.44 29.388 Banco Industries expect sales to grow at a rapid rate over the next 3 years, but settle to an industry growth rate of 7% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. Banco Industries has a weighted average cost of capital of 10%, $50 million in cash, 560 million in debt, and 18 milion shares outstanding. Il Banco Industries can reduce its operating expenses so that EBIT becomes 12% of sales, by how much will its stock price increase? 27.36 GO QA. $7.89 OB $9.47 C. $13.8 D. $23.66 FCF Forecast is million Year 0 1 2 3 4 Sales 240 270 290 310 3255 Growth Ders Pior Year 125% 7.4% 5.0% ERIT (10% of Sales) 3240 34.80 37.20 3906 Less Income Tax (37%) (6.48 (696) (7.44) (7.31) Less Increase in NWC (12% of Change in Sales) 360 240 22:40 186 Free Cash Flow 22.32 25.44 29.388 Banco Industries expect sales to grow at a rapid rate over the next 3 years, but settle to an industry growth rate of 7% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. Banco Industries has a weighted average cost of capital of 10%, $50 million in cash, 560 million in debt, and 18 milion shares outstanding. Il Banco Industries can reduce its operating expenses so that EBIT becomes 12% of sales, by how much will its stock price increase? 27.36 GO QA. $7.89 OB $9.47 C. $13.8 D. $23.66

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