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In-Charge is apublicly listed firm that provides technology allowing customers tomonitor their credit and debit card use, set spending limits andactivate and de-activate cards through apps on mobile devices. Thecompany recently struck deals with key payment processing companiesto adopt this technology in order to prevent fraud. In-Charge isentering a fast growth phase, which is expected to last for 5years. The following table contains reported income statementinformation for the recent year 2018 (all numbers are in$1,000s):

Year	2018
Revenues	4,500
Operating Costs (incl. Depreciation.)	2,250
EBIT	2,250
Interest expense	2,025
EBT	225
Taxes	90
Net Income	135

Detailed projections (in $1,000s) forthe years 2019-2023 are given below:

• Expected growth in revenues is 100% per year.
• Operating profit (EBIT) equals 50% of revenues in each of theyears 2019-2023.
• The increase in net working capital equals 25% of revenues ineach of the years 2019-2023.
• Gross investments in fixed assets equal $1,200 in each of theyears 2019-2023.
• The amount of depreciation is equal to $700 in each of theyears 2019-2023.

In-Charge currentlyhas 2 million shares outstanding and has a debt ratio(D/V) of 50% in market value terms. The firm hasa BBB bond rating and its equity beta equals 1.90. The interestrate on T-bonds equals 2.5%, the expected yield on BBB-rated bondsis 4% and the market risk premium is 5%. Finally, you can assumethat all cash flows will be realized at the end of the year andthat the firm is subject to a 40% marginal corporate tax rate. Withthis information answer the following four questions.

1. Determine the relevant Free Cash Flows for a valuation of thefirm for the years 2019-2023 (in

$1,000s). Show your calculations.

2. Calculate the weighted average cost of capital for In-Charge.Show all your calculations.

3. Determine In-Charge’s business risk (or asset beta). Show allyour calculations.

4. Now suppose that In-Charge wants to immediately change itsleverage to 25% with a corresponding cost of debt of 3%. If weassume that In-Charge maintains a constant growth rate of 2% after2023, what is In-Charge’s share price?