The following information is given in respect of a company:
2016 Forecast 2015 Actual
Cash 10 5
Accounts receivables 30 15
Inventory 40 30
Current Assets 80 50
Gross PPE 400 300
Accumulated Depreciation -190 -140
Total Assets 290 210
Accounts Payable 20 20
Short-term debt 20 10
Current Liabilities 40 30
Long term debt 114 100
Common stock 50 50
Retained Earnings 86 30
Total liabilities and owners’ equity 290 210
Sales 400 250
Cost of goods sold 120 100
Gross Profit 180 150
SG&A 35 30
Depreciation 50 40
EBIT 195 80
Interest Expense 15 10
Pre-tax earnings 180 70
Tax (30%) 54 21
Net Income 126 49
Calculate forecasted free cash flow to the firm.
If cash flows are expected to grow at a rate of 8% from 2017 to 2030 and a rate of 3% thereafter into the foreseeable future. Compute the value of this firm if cost of capital is 12% in high growth stage and 5% in stable growth stage.