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(hint: please use the definitions of FCFE and FCFF ; also you will need to carefully match each with their corresponding discount rate)

Avis Budget Group, a provider of car rentals, is considering introduction of a new, electric car, rental line in 2017. The new rental line is an extension of the existing Avis assets. Forecasted project cash flows (as of end of year) are shown below for 2017-2021. Tax rate is 40%. Market risk-premium E[r_M r_F] is 5%, risk-free rate is 5%. Avis equity beta is 1.5. The debt beta is 0. Aviss leverage for this project is 60%. Working capital is all non-cash.

(in $ million)	2017	2018	2019	2020	2021
Sales	20	150	230	260	260
Cost of goods sold	10	100	140	200	170
Depreciation	0	60	50	50	40
Operating profit (EBIT)	10	-10	40	10	50
Interest Expense	0	20	20	20	20
Net Profit (Pre-tax)	10	-30	20	-10	30
Tax (40% of profit)	4	-12	8	-4	12
After-tax net income	6	-18	12	-6	18
Working Capital Balance	20	70	90	100	130
Capital expenditure	200	100	50	0	0

1. Please calculate the present value (i.e., as of end of 2016, assuming that is today) of the FCFE in 2020.
2. Please calculate the present value (i.e., as of end of 2016, assuming that is today) of the FCFF in 2020.
3. CFO is weighing a potential liquidation of project at the end of 2021. At that time, CFO expects that she can sell new car rental unit for $200 million. Please calculate the liquidation value of this project.

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